Landlords buy "Landlord Insurance" because it covers more than a homeowner's policy. Unfortunately there are events which even a landlord's policy may not cover. A policy that has maximum possible coverage for any and every possible insurable event would carry a very high premium. Conversely, in time of need, there is nothing like being under-insured to make someone want "to turn back the clock". The umbrella insurance policy for landlords may be the answer.
What is an Umbrella Policy?
It is a policy that delivers additional coverage over and above the regular policy coverage. A base policy will set limits to both insured amounts, and to expected or possible events. Some events are so unlikely that the base policy does not cover them anyway.
Excess liability coverage would not come to the rescue, either, because these policies do not cover anything not already covered by the base policy. The umbrella policy does what it sounds like - it hangs over the base policies, and covers what the base policies do not.
Here is an example of an umbrella policy covering an unexpected event:
A murder was committed in a Florida apartment (in 2005). The base policy covered injury and accident, of course, but in this case, the murderer gained easy access to the property because the management company had not repaired a security lock. The court case decided that the landlord was negligent, and the family was awarded a multi-million dollar compensation that the base policy did not cover.
The umbrella policy, therefore covers a broader range of insurable events. The base policy and the umbrella policy should have the same effective dates.
Landlords who consider umbrella coverage should check to see that their base policy has what is called a prior acts rider. This will make sure they are covered against a claim made by, say, a tenant against an event that occurred before the current policy actually went into effect. This could happen if a property is bought with an existing tenant in place.