The Hidden Gaps: What Your Landlord Insurance Might Not Cover

This post is written by Trusted Partner, Park Insurance. To become a contributing editor, please contact our Real Estate Investor Solutions Specialist, David Maxwell at david@reincanada.com.

IYou’ve worked hard to build your real estate portfolio. You’ve carefully chosen your properties, screened your tenants, and secured landlord insurance to protect your investment. But here’s a question: are you truly covered against all the risks?

Let’s explore some hidden gaps in landlord insurance policies that investors often overlook—and what you can do about them.

Vacancy Periods: When Empty Properties Aren’t Covered

Did you know many standard landlord insurance policies don’t provide coverage when a property is vacant for extended periods? Typically, if your property remains unoccupied beyond a specified number of days—often 30 or 60—your coverage could lapse, leaving you fully exposed.

Imagine a burst pipe occurring during a vacancy that leads to costly water damage. Without specific coverage for vacant periods, that repair cost might be entirely out-of-pocket. To close this gap, talk with your Park Insurance broker about vacancy endorsements or specialized coverage extensions designed for investors.

Tenant-Caused Damage Isn’t Always Included

You might assume damage caused by tenants would naturally fall under your landlord insurance. Unfortunately, intentional damage by tenants—like vandalism or deliberate property destruction—is commonly excluded in standard policies.

Even accidental damage like pet-related issues or neglect may not be covered. A tenant’s security deposit can help, but it’s often insufficient to cover extensive damage. Clarifying what exactly your policy covers is essential to avoid surprise expenses.

Speak with your broker about potential add-ons or riders specifically covering tenant-related incidents. It’s a simple step to avoid a costly oversight.

Sewer Backups and Overland Flooding Can Be Surprises

Standard property policies often exclude sewer backup and overland water damage. You might not realize it until a basement flood results from heavy rains or municipal infrastructure failure, costing thousands of dollars.

Investors in British Columbia, where heavy rains and flooding are increasingly common, should pay special attention here. A sewer backup rider or a separate overland water policy is worth discussing with your Park Insurance broker to keep your investment truly protected.

Equipment Breakdown Coverage: Protecting Vital Systems

If your property’s heating or cooling systems break down unexpectedly, standard landlord insurance typically won’t cover the repair or replacement costs. This can lead to significant unexpected expenses, impacting your profitability and cash flow.

Equipment breakdown coverage offers specific protection for key systems, from boilers to electrical systems. This coverage isn’t expensive and can save you considerable stress if something goes wrong. It’s another conversation worth having with your broker to secure your cash flow and peace of mind.

Liability Limits That Fall Short

Landlord policies generally include liability coverage—but is it enough? A slip-and-fall lawsuit or a major incident could quickly exhaust standard policy limits, leaving your personal assets at risk.

Consider this scenario: a visitor slips on icy steps at your property and sustains serious injuries, leading to significant medical expenses and a lawsuit. Basic liability coverage might not fully protect your assets in such situations.

Adding an umbrella policy to extend your liability coverage is a smart move. It’s affordable, and offers significant peace of mind.

Ensuring Your Policy Matches Your Actual Needs

Insurance isn’t just about having a policy—it’s about having the right coverage. As your real estate portfolio grows and changes, regular reviews of your policy ensure it keeps up with your current reality. Have you renovated? Are properties vacant more frequently than before? Are you shifting your tenant profile? Each of these changes influences your coverage needs.

Regular discussions with your Park Insurance broker can pinpoint and close any coverage gaps, giving you comprehensive protection aligned to your investment strategy.

Final Thoughts: Don’t Let Coverage Gaps Derail Your Investments

You invest too much time, energy, and money into your properties to discover gaps in coverage only after the fact. Being proactive now can prevent costly, unpleasant surprises later.

If it’s been a while since you’ve reviewed your landlord insurance, now is the perfect time. Connect with your Park Insurance broker, review your existing policies, and ensure your real estate investments remain resilient and fully protected.

Don’t leave your portfolio vulnerable. Talk to a Park Insurance broker today and get clarity and confidence in your coverage.

Chris Westrop is the Vice President of Commercial Lines at Park Insurance. With over 30 years of experience in the commercial insurance industry, he is a Chartered Insurance Professional with the Insurance Institute of Canada. As a REIN member and regular attendee at many of their programs, Chris brings valuable insights to real estate investors. Learn more about Chris and the experienced team of commercial insurance advisors at Park Insurance. Chris can be reached at (604) 659-3133 or cwestrop@park.ca.