Landlord Insurance in Illinois

Learn more about our landlord coverages and get a quote from one of our knowledgeable independent agents. Providing coverage to residents across Illinois, Arizona, Florida, Indiana, Louisiana, Michigan, Montana, Nevada, New Hampshire, Ohio, Tennessee, Texas, Washington, and Wisconsin.

What is landlord insurance?

Landlord insurance is a specialized type of property insurance designed to protect landlords from financial losses associated with renting out residential or commercial properties. Unlike standard homeowners insurance, which covers owner-occupied properties, landlord insurance specifically addresses the unique risks faced by property owners who lease their properties to tenants. In Illinois, where rental properties range from urban apartments to rural homes, having the right landlord insurance policy is crucial to safeguarding your investment.

Which landlords in Illinois should have landlord liability insurance?  

In Illinois, all landlords should consider having landlord liability insurance, regardless of the size or number of properties they own. Here are some specific types of landlords who should particularly consider obtaining landlord liability insurance:

1. Owners of Multiple Properties: Landlords with several rental properties face a higher risk of claims simply due to the increased number of tenants and visitors on their properties.
2. Owners of Multi-Unit Buildings: If you own buildings with multiple units, such as apartment complexes or duplexes, the likelihood of incidents that could lead to claims or lawsuits is greater.
3. Landlords with Tenants: Anyone renting out a property should have landlord liability insurance to cover potential claims made by tenants or their guests for injuries or damages.
4. Landlords with High-Traffic Properties: Properties that experience a high level of foot traffic, such as those in popular areas or near commercial establishments, are at a greater risk for accidents and should be covered by landlord liability insurance.
5. New Landlords: Individuals who are new to property management may not be fully aware of the risks associated with renting out property and should protect themselves with landlord liability insurance.
6. Owners of Vacation Rentals or Short-Term Rentals: Properties rented out on a short-term basis, such as through Airbnb or VRBO, can have a high turnover rate and varying levels of liability exposure, making landlord liability insurance crucial.

In summary, while Illinois does not legally require landlords to have landlord liability insurance, it is highly advisable for any landlord to obtain it to protect themselves from potential lawsuits and financial losses resulting from incidents on their rental properties.

What does landlord insurance cover?

Landlord insurance typically provides coverage in three primary areas: property damage, liability, and loss of rental income. Here’s a closer look at what each of these covers:

Property Damage: This portion of landlord insurance covers damage to the physical structure of the rental property and any personal property owned by the landlord that is used to service the rental. Coverage typically includes:

• Fire and Smoke Damage: Covers repairs or rebuilding costs if the rental property is damaged or destroyed by fire or smoke.
• Wind and Hail Damage: Provides protection if a storm damages the roof, siding, or windows.
• Vandalism: Covers repairs if the property is intentionally damaged by vandals.
• Burst Pipes and Water Damage: Offers coverage for water damage due to burst pipes or leaks (excluding flooding from natural disasters).
• Other Natural Disasters: Coverage might include damages caused by lightning, earthquakes, or other covered perils, depending on the policy.

Liability Protection: Liability coverage is essential for landlords to protect against potential lawsuits or claims. This can include:

• Injury or Accident Claims: If a tenant or visitor is injured on the property due to a condition that is deemed the landlord’s responsibility (e.g., a slip and fall on an icy sidewalk), this coverage helps pay for legal fees, medical expenses, and potential settlements.
• Legal Fees: Covers costs associated with legal defense if a landlord is sued by a tenant or visitor.

Loss of Rental Income: This coverage, sometimes known as loss of use or rental income protection, helps compensate for lost rental income if the property becomes uninhabitable due to a covered peril, such as a fire or severe storm. It ensures that landlords have a source of income while repairs are being made.

What are the optional coverages available for landlord insurance?

Landlords can often add optional coverages to their policy to better tailor protection to their specific needs. These might include:

• Flood Insurance: Standard landlord insurance policies typically do not cover flood damage, so landlords might need to purchase separate flood insurance, especially if the property is in a flood-prone area.
• Earthquake Insurance: Similar to flood insurance, earthquake coverage is usually not included in standard policies and needs to be purchased separately.
• Building Code Coverage: If building codes have changed since the property was built, this coverage can help cover the costs of bringing the property up to current codes after a covered loss.
• Landlord Contents Insurance: Provides coverage for furnishings owned by the landlord in a rental unit, commonly used for furnished rentals.

• Umbrella Liability Insurance: Provides extra liability coverage beyond what is included in the landlord policy.
• Guaranteed Income Insurance: Offers protection against tenants who fail to pay rent (though this is less common and can be expensive).
• Worker’s Compensation: If the landlord has employees working on the property, worker’s compensation insurance may be necessary to cover potential injuries to those employees.

How is landlord insurance different from homeowners insurance?

While landlord insurance and homeowners insurance share some similarities, they serve different purposes and offer distinct coverages:

1. Occupancy: Homeowners insurance is designed for owner-occupied properties, while landlord insurance is specifically for properties that are rented out to tenants. This difference is crucial because rental properties face unique risks that are not covered under a standard homeowners policy.
2. Liability Coverage: Homeowners insurance typically includes liability coverage, but it may not be sufficient for the increased risks associated with rental properties. Landlord liability insurance offers broader protection tailored to the needs of landlords, including coverage for tenant and visitor injuries.
3. Loss of Rental Income: Homeowners insurance does not cover lost rental income, as it is not designed for income-generating properties. Landlord insurance, on the other hand, includes this coverage, ensuring that you are financially protected if your rental property becomes uninhabitable.
4. Coverage for Tenant-Related Risks: Landlord insurance accounts for the risks posed by tenants, such as accidental damage to the property or liability claims. Homeowners insurance does not provide this level of protection.

What factors affect the cost of landlord insurance in Illinois? 

The cost of landlord insurance in Illinois can be influenced by several factors, including:

1. Property Location: The location of the rental property significantly impacts insurance costs. Properties in areas with higher crime rates, severe weather conditions, or higher risk of natural disasters generally have higher premiums.
2. Property Type and Age: Older properties or those built with materials that are more susceptible to damage may incur higher insurance costs. Likewise, the type of property (single-family home, multi-unit building, etc.) can affect the cost.
3. Property Condition: Well-maintained properties are considered lower risk by insurers and may have lower premiums. On the other hand, properties in poor condition or needing significant repairs can increase insurance costs.
4. Coverage Amount and Type: The extent of coverage (dwelling, liability, loss of rental income, etc.) and the specific policy limits chosen will directly impact the premium. More comprehensive coverage typically costs more.
5. Deductible: The deductible amount you choose can affect your insurance cost. A higher deductible usually means lower premiums, while a lower deductible means higher premiums.
6. Claims History: A history of claims on the property or by the landlord can lead to higher insurance premiums. Insurers may view frequent claims as an indicator of higher risk.
7. Safety Features: Properties with safety features such as security systems, smoke detectors, fire extinguishers, and updated wiring and plumbing may qualify for discounts, reducing insurance costs.
8. Tenant Profile: The type of tenants you rent to (e.g., students, professionals, families) can also affect insurance premiums. Some insurers may consider certain tenant profiles as higher risk.

By considering these factors, landlords in Illinois can better understand what influences their insurance costs and make informed decisions about their coverage options.

How can Illinois landlords obtain landlord liability insurance? 

Reach out to the independent agents at Gee-Schussler Insurance for a fast quote on landlord insurance in Illinois. Our team is dedicated to helping you find the right coverage to protect your rental property and your financial interests. With our personalized service and extensive knowledge of the Illinois market, we may tailor a policy that meets your specific needs.