Situated on the east-coast, almost 36% of New Jersey’s residents are renters. The state’s biggest city, Newark, has the highest percentage of renters for any U.S city - almost 80% live in rented properties. With a population of over nine million people, New Jersey is home to many types of landlords, ranging from individuals who own a single rental property to large corporations with extensive portfolios.
Landlord insurance is specifically designed to cover the unique needs that come with being a landlord.
What is landlord insurance?
Unlike homeowner's insurance, which covers the home itself and any belongings you might have inside, landlord insurance is designed to cover properties that are rented out. The types of properties can be anything from a single-family home to a large apartment building - as long as it is rented out for habitational purposes you need to insure the property with an appropriate landlord insurance policy.
While there are some similarities between a standard homeowners insurance and a landlord insurance policy, it’s crucial to keep in mind that a rental property is first and foremost a business and every landlord need to cover their needs a business owner. Landlord insurance provides custom coverage for the additional risks associated with renting out a property. In addition to the structure of the home, landlord insurance covers you against claims made by your tenants, such as those relating to personal injury or damage to the property. Landlord insurance can also provide coverage for loss of rental income in certain circumstances.
Who needs landlord insurance?
Any property that is rented out for a longer period of time should be insured by a landlord policy. While there is no set definition for what qualifies as a longer period of time, most carriers will require a minimum of 3 months and the property should be intended for long term rentals. For properties that are rented out for shorter period of time, typically to holidaymakers, you need a different type of policy known as short-term rental insurance.
Special insurance considerations for landlords in NJ
New Jersey is a densely populated state with a thriving real estate market, and there are many opportunities for real estate investors to generate income from rental properties. However, there are certain risks associated with NJ in particular.
New Jersey is typically not considered to be a “landlord-friendly state”. The state has very strict laws related to landlord-tenant relationships, and they tend to favor the tenant over the landlord. NJ is also one of 5 U.S. states that practice rent control, the amount varies from municipality to municipality and some don’t practice rent control at all.
In addition, New Jersey is prone to natural disasters like hurricanes and flooding, which can cause significant property damage. Properties located along the Jersey shore may have difficulties obtaining insurance in general due to the high risk of hurricanes and other natural disasters. If a property has been rejected due to being in a high-risk coastal area, NJ landlords can try obtaining insurance through the FAIR program or Coastal Market Assistance Plan.
New liability insurance requirements for landlords in New Jersey
Landlord insurance used to be optional for landlords in New Jersey, but as of November 2022, new legislation requires all landlords to have liability insurance. The law mandates that landlords obtain condo or apartment buildings insurance coverage of at least $500,000, to cover any death or physical injuries that may take place on their property.
If your rental property is a small, multi-family home, then you are required to have a minimum of $300,000 in liability coverage.
So check the current landlord insurance laws in New Jersey and make sure you have the right coverage for your rental business.
How much is landlord insurance in New Jersey?
On average, landlord insurance in NJ can cost anywhere from $1,500 to $2,000 per year for a single family rental, but the exact cost will depend on several variables such as:
- Size of property
- Property standard and facilities
- Coverage limits and deductibles
- Additional coverages
If you want to know how exactly much it will cost to insure your rental property, you can get a quote directly on our website in less than 5 minutes.
Can a landlord require renter's insurance in New Jersey?
While landlords in New Jersey cannot mandate tenants to purchase renter's insurance, they can strongly encourage it. Renter's insurance can provide valuable protection for tenants, covering their personal belongings and liability in the event of an accident or damage to the property.
Encouraging tenants to purchase renter's insurance can also help protect your investment property, as it can reduce the likelihood of lawsuits or claims related to tenant negligence.
Getting landlord insurance in New Jersey is an important way to protect your rental property as well as protecting yourself from potential liability claims. Wether you started out as investor or started renting out what used to be your primary residence, you now need to treat your property as a business and not as your home, and the insurance coverage as well.
Honeycomb is a licensed insurance provider in the state on NJ, and can offer bindable quotes directly on our website. If you are curious about how much it will cost to insure your rental property with Honeycomb, you can try our quote process here - you do not need to commit to buying the policy.