What is absentee landlord insurance?

Owning a rental property can be a great investment, but being a landlord comes with its share of responsibilities and risks. That’s why there are multiple types of landlord insurance to protect you from the unexpected. 

Now, if you’re a landlord who doesn’t live in Canada, managing a property from afar can be even more challenging. It’s important to make sure your property is protected, especially when you can’t check on it regularly. 

This is where absentee landlord insurance comes into play.

In this post, we’ll dive into what absentee landlord insurance is, what it covers, the factors influencing the cost, and why your tenants still need their own insurance policy.

What is an absentee landlord in Canada?

First thing’s first, let's define the term “absentee landlord”. 

An absentee landlord is someone who owns a property but doesn’t live nearby – or sometimes even in the same country – as the property they own. This can include Canadian citizens living abroad or foreign investors who own rental properties in Canada. 

As an absentee landlord, it can be difficult to keep an eye on your property, making it critical to have the right insurance coverage in place.

What is absentee landlord insurance?

Absentee landlord insurance is a specialized type of insurance designed for landlords who don’t live near their rental properties. 

This insurance provides protection against the many of the risks absentee landlords face, such as property damage, liability claims, and loss of rental income. 

Because you’re not on-site to deal with issues as they arise, absentee landlord insurance is designed to give you peace of mind by covering potential problems that could affect your investment.

What does absentee landlord insurance cover?

So, what does landlord insurance cover? Absentee landlord insurance policies can vary, but they typically offer several key coverages that help protect your property and finances.

Here's what you can expect to have covered by absentee landlord insurance in Canada:

Property damage

Absentee landlord insurance in Canada covers damage to your property caused by events like fire, storms, vandalism, or even accidents caused by your tenants. 

Liability

If someone gets injured on your property, absentee landlord liability coverage can help cover legal fees and medical costs if you’re found responsible. This is particularly helpful for absentee landlords who might not be aware of potential hazards on their property, like loose patio stones or icy walkways.

Loss of income 

If your property becomes uninhabitable due to a covered event (like a fire or severe windstorm), this coverage can help compensate you for the rental income lost while the property is under repair.

Emergency repair coverage

Some absentee landlord insurance policies cover emergency repairs that need to be made quickly to prevent further damage to the property.

How much does absentee landlord insurance cost?

The cost of absentee landlord insurance varies based on several factors. 

Generally, you can expect to pay more for this type of insurance than you would for standard landlord insurance, simply because of the additional risks involved when you’re not around to check on the property regularly.

Factors that impact your absentee landlord insurance quote:

Several factors will influence your insurance quote, including:

Location of the property

Properties in high-risk areas (flood zones or regions with high crime rates) will typically cost more to insure. This applies to standard homeowner's insurance policies, as well as absentee landlord insurance policies. 

Property value

The higher the value of your property, the more it will cost to insure. This makes sense since more expensive properties will require higher payouts if a claim is made.

Type of property

Single-family homes, multifamily units, and condos all have different risk profiles and therefore different insurance costs.

Distance from your location

The further you live from your property, the more you’ll pay in insurance premiums. This is because it’s harder to manage and maintain a property from a distance, and it will take longer for you to get there if an issue arises.

Coverage limits and deductibles

Higher coverage limits and lower deductibles will increase your premium, but they also provide more protection.

Does my tenant need renters insurance?

In short, yes. Your tenants still need renters insurance, regardless of whether you purchase specialized absentee landlord insurance.

While your absentee landlord insurance will cover your property and liability, it won’t cover your tenant’s personal belongings or protect them from liability if they damage your property.

Requiring your tenants to have their own renters insurance is a smart move. It ensures their personal belongings are protected, and it can help cover your deductible if the tenants cause damage.

It can also help prevent disputes down the line, as both you and your tenant will have clear expectations about who is responsible for what in case of an incident.

The bottom line

Being an absentee landlord comes with its own unique set of challenges, but having the right insurance can help ease some of the stress. 

Absentee landlord insurance is designed to protect you and your property from the risks that come with managing a rental from afar. Now that you understand what absentee landlord insurance is all about, it’s time to decide if this is the right type of insurance for you.

Remember, it’s always best to speak with an insurance professional to ensure you have the coverage that’s right for your specific situation, especially when dealing with international property ownership.

Also read:

• Landlord insurance for your seasonal property
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