What Does Landlord Insurance Cover

Owning rental property comes with a unique set of responsibilities and risks. Beyond the appeal of passive income or long-term equity growth, landlords must deal with everything from emergency repairs to tenant injuries to property damage caused by natural disasters. Unlike homeowners who occupy their properties, landlords face additional challenges that make them more vulnerable to financial loss.

For example, if a tenant leaves a tap running and floods the unit below, or if a fire forces you to relocate multiple tenants, the financial and legal implications can be serious. Standard home insurance is not designed to handle these scenarios. That’s where landlord insurance becomes essential.

Whether you rent out a single unit, a second property, or manage multiple rental buildings, understanding what landlord insurance includes and what it doesn’t can help you protect your property, your income, and your peace of mind. 

Here’s what you need to know.

What Is Landlord Insurance?

Landlord insurance is a policy designed specifically for property owners who lease their homes, condos, or buildings to tenants. It provides protection for the physical structure, legal liability, and potential loss of rental income resulting from covered events.

Unlike traditional home insurance, landlord insurance takes into account the risks that come with having renters on your property, such as property damage caused by tenants or lawsuits stemming from tenant injuries. Without the proper coverage, a single event could cost landlords thousands of dollars out of pocket.

It’s also worth noting that landlord insurance can often be customized to suit the specific type of rental situation, whether you’re renting a full home, a basement suite, or a multi-unit building.

Related Article: Understanding the Basics of Home Insurance: A Comprehensive Guide

What Does Landlord Insurance Typically Cover?

Landlord insurance varies depending on the provider and level of coverage, but most policies include three core components:

1. Property Damage

Covers the physical structure of your rental property against damage caused by:

• Fire
• Lightning
• Wind or hail
• Vandalism
• Theft
• Burst pipes or water damage (not due to negligence)

This may include garages, sheds, fences, decks, and any appliances or systems provided with the unit (like HVAC or built-in washers and dryers).

Property damage coverage ensures that you don’t have to dip into your own savings to rebuild or repair major structural elements. It also typically includes debris removal and rebuilding costs.

2. Liability Protection

Protects you if someone is injured on the property and you’re found legally responsible. Coverage includes:

• Legal defence costs
• Medical bills
• Settlement or judgment amounts

This is particularly valuable if you own older properties where stairs, sidewalks, or railings might increase the risk of falls or injury. Even one claim can cost tens of thousands in legal and medical expenses.

3. Loss of Rental Income

If a covered event makes your rental unit uninhabitable, this helps replace lost rental income during the repair period. It ensures your cash flow isn’t completely halted while work is done, helping you meet mortgage payments, taxes, and other expenses.

Some policies also cover partial loss of income, such as when one unit in a multi-family building is affected while the rest remains occupied.

Optional Add-Ons and Riders

Depending on your needs, you can add extra protection to your landlord insurance policy. Some popular endorsements include:

• Guaranteed rental income coverage: Protects you if a tenant fails to pay rent for a specified period.
• Sewer backup or overland water protection: Especially important in flood-prone areas or older properties with outdated plumbing.
• Flood insurance: Overland flood damage is not covered under most standard policies.
• Vandalism and malicious damage by tenants: Useful if your property is vacant or you’re worried about high-risk tenants.
• Legal expense insurance: Helps cover the cost of pursuing eviction or defending against false claims.

Speaking to an experienced broker helps you determine which add-ons are relevant based on location, tenant type, and property age.

Related Article: Liability Insurance: What It Covers and Why Your Business Needs It

What Landlord Insurance Doesn’t Cover

Most policies have exclusions. Here’s what landlord insurance typically does not cover:

• Tenant belongings: Tenants must purchase their own renter’s insurance to protect personal items.
• Normal wear and tear: Deterioration from aging or tenant use isn’t considered insurable damage.
• Routine maintenance or repairs: You’re still responsible for upkeep, like plumbing repairs or appliance replacement.
• Intentional acts by the landlord: Damage resulting from neglect or deliberate action is not covered.
• Vacant properties: If your property is unoccupied for more than 30–60 days, you may need a vacancy permit or risk losing coverage.

Understanding these gaps can help you better maintain your investment and avoid surprises when filing a claim.

Landlord vs. Homeowner Insurance: Key Differences

Many landlords mistakenly assume their homeowner policy will protect them when they rent out a property. Here’s how landlord insurance differs:

• Occupant: Homeowner insurance covers owner-occupied homes; landlord insurance covers tenant-occupied properties.
• Liability: Homeowner policies typically don’t include tenant-related liability claims.
• Rental income: Homeowner insurance won’t reimburse you for lost rent; landlord insurance can (with the right coverage).
• Coverage gaps: Renting a property without switching to landlord coverage can result in denied claims.
• Property use: Home policies assume normal residential use; rental homes come with unique risks like higher turnover or misuse.

Related Article: Is Tenant Insurance Mandatory in Ontario?

Why Every Landlord Needs Proper Coverage

Renting out property is a business, even if it’s just a basement apartment. A burst pipe, slip-and-fall lawsuit, or tenant dispute can turn into a costly setback fast. Landlord insurance protects your property and your income, and your financial future.

Without the right policy, even a simple accident could drain your savings or leave your rental uninhabitable for months. And if you rely on rent to pay a mortgage, the financial impact can be immediate and severe.

At Ron Johnston Insurance, we help landlords assess risk and build policies that reflect the realities of property ownership. Whether you’re a first-time landlord or managing a portfolio of buildings, having the right coverage helps you operate with confidence.

Protect Your Property and Your Peace of Mind

Landlord insurance is essential for anyone renting out property in Ontario. It covers property damage, legal liability, and income loss so you can focus on managing your investment, not worrying about what could go wrong.

Want to protect your rental property the smart way? Contact Ron Johnston Insurance today for a personalized landlord insurance quote.