Landlord Insurance
Terms Explained

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Key terms to get you started

Obie simplifies the investment property insurance process, minimizes risks, and enhances borrower experiences—keeping your operations smooth and your clients satisfied.

Absentee Landlord
Absentee landlords are owners who rent out real estate in one location while residing in another. Learn key traits, responsibilities, and the advantages and risks.
Accounts Receivable
Accounts receivable insurance, also called trade credit insurance, protects a company from financial loss due to customers not paying their debt.
Actual Cash Value (ACV)
Actual cash value (ACV) is the amount of the item’s worth minus wear and tear, aging, and deterioration. Learn more about ACV and how it is calculated.
Actual Loss Sustained
Actual loss sustained is often part of business interruption coverage. It covers the loss of income sustained while access to the insured’s business is prohibited by order of civil authority or as a result of physical loss or damage of their property from a covered peril.
Additional Structures Coverage
Additional structures insurance coverage includes the repair or replacement of structures other than your home that are damaged by a covered risk.
Admitted and Non-Admitted Insurance Carriers
Admitted insurance companies have received approval by the state's insurance department. By contrast, non-admitted insurance companies have not received state approval.
Agreed Value
Agreed value, or guaranteed value, is an amount you and your insurer agree a specific item is worth. In the event of a total loss covered by your policy, the insurer would pay the agreed-upon amount.
Arson Conviction Reward
Some insurers offer a reward for arson or theft conviction relating to damage or loss at an insured property. Offering a reward can help reduce the chance of fraud.
Assignment of Benefits
An assignment of benefits is a legal agreement between an insurance policyholder and a third party that enables the third party to file an insurance claim, make decisions, and directly bill an insurer on behalf of the policyholder. Read this article to learn more about the assignment of benefits.
Backup of Sewer or Drain Coverage
Floods can cause sanitary sewer lines to back up into houses and businesses through drain pipes. Backups can cause health hazards and repairs can be expensive.
Builder’s Risk Insurance Policy
A contractor typically carries insurance covering the structure and equipment while a home is under construction.
Building Limit
Establishing a building limit for your property coverage is a way to be covered up if your property were a total loss. The property can be covered for its replacement value, which is the cost to repair or replace it with a similar kind and materials. It also can be insured for actual cash value, which is the replacement cost minus depreciation. To decrease the potential premium, the policy can be written to the full value with a high deductible.
Building Under Construction
This insurance covers your home for risks, such as fire or theft, while it is under construction.
Business Income
Business income insurance, also known as business interruption insurance, helps cover income lost when your business must shut down due to a covered peril, such as a fire. The amount paid to you for business income coverage is based on your business’s income and expense records.
Business Personal Property Insurance
Business personal property (BPP) insurance typically covers property inside the building and up to 100 feet outside of the building that is not part of the permanent structure. This includes office supplies, furniture, furnishings, computers, heavy equipment, machinery, and other movable items used by your business. Warehouse or retail stock also is typically included.
Business income and extra expense (BIEE)
Business income and extra expense insurance provide coverage when your business temporarily closes due to a covered loss, such as a fire.
Co-insurance
Co-insurance is the percentage of costs you will pay on a claim after you’ve paid your deductible.
Collapse
Collapse is a peril that can be covered under property insurance. Coverage may be triggered by the sudden falling-in, caving-in, or flattening into the rubble of a building. Specific causes of collapse that are covered are typically included in a policy, such as hidden decay or the use of defective construction, remodeling, or renovation materials. A sudden collapse might not be covered if the property owner knew there was wear and tear on the building or was not maintaining the building.
Crime Insurance
Commercial crime insurance is a type of business insurance that provides coverage for losses due to forgery; computer fraud; embezzlement; theft; employee dishonesty; and other business crimes.
Damage to Property of Others
Damage to the property of others is typically part of homeowners’ insurance. It covers damage to property and liability or legal responsibility for bodily injury or property damage that policyholders or family members cause to other people. It also covers damage caused by household pets.
Debris Removal
Property insurance typically covers the cost for debris removal if a property is damaged due to a covered peril, such as a fire.
Debt-Service Coverage Ratio
DSCR, or Debt-Service Coverage Ratio, measures a property's ability to cover its debt payments. Learn how to assess financial health and investment risk in real estate.
Deductible
A deductible is the amount you will pay out of pocket for losses or damages before an insurance provider makes a payment toward a claim.
Each occurrence
Each occurrence—or per occurrence—limit is the maximum amount an insurer will pay for claims due to a single incident during the policy term. One deductible applies per occurrence.
Earthquake Insurance
Earthquake insurance covers damage to your house and personal belongings inside your home resulting from an earthquake. It also may cover additional living expenses to live somewhere else while the area is evacuated or the home is being repaired.
Earthquake sprinkler leakage
An endorsement—or add-on—can be purchased for an insurance policy that will provide coverage for damage to a building and its contents caused by sprinkler leakage due to an earthquake. It also typically would provide coverage if the sprinklers become damaged.
Electronic data processing
Electronic data processing (EDP) insurance typically covers loss or damage to computers, media (such as a disc), and data due to perils such as mechanical breakdown, electrical disturbance, power surge or changes in temperature and humidity. EDP insurance can be purchased on its own or be added to a property or package policy as an endorsement.
Emergency Vacating Expense
Emergency vacating expense insurance covers costs due to an emergency occurring at a property. This coverage might be part of a homeowners insurance policy. It typically will pay living expenses incurred due to damage that made a property uninhabitable or if a mandatory involuntary evacuation is ordered. Coverage may kick in only if the cause of the evacuation is covered.
Employee Benefits
Employee benefits liability insurance covers businesses from errors or omissions that happen when employee benefit plans are administered. For instance, if an employee were mistakenly not enrolled in the company’s dental plan, insurance would pay the benefits that should have been received. Coverage applies to a variety of employee benefits, including health, dental, and life insurance plans along with workers’ compensation or profit-sharing plans.
Employee Dishonesty
Employee dishonesty is part of commercial crime insurance. It covers a business employer from a financial loss resulting from fraud or theft conducted by an employee or group of employees.
Equipment Breakdown Insurance
Equipment breakdown insurance provides coverage to repair or replace damaged or broken equipment due to mechanical or electrical failure. It includes coverage for unexpected events such as a short circuit, power surge or loss of air pressure or vacuum.
Excess
An excess, or secondary, insurance policy extends the coverage limit of the primary policy. The primary policy will be used first to cover a claim. The excess policy would then be used to cover the same claim up to a higher limit.
Extended Period of Indemnity
Extended period of indemnity endorsement can be part of a business interruption policy. It covers loss of income during a specified period of time, such as 30 days, after a damaged property is repaired.
Fire Insurance
Fire insurance typically covers the cost to repair, reconstruct, or replace property damaged or destroyed by fire. Its coverage includes smoke and water damage. If the fire displaces the insured, the policy may pay the cost of accommodations while a property is in disuse.
Firefighting Material and Expenses
Firefighting expenses insurance can cover the cost of material used to put out or control the fire damaging an insured property. Coverage also may include the cost of clothing or personal effects damaged or lost as a result of extinguishing or controlling the fire along with expenses, such as wages paid for fighting the fire.
Flood Insurance
Commercial and residential real estate owners should consider purchasing flood insurance, even if the property is not in a high-risk or flood-prone area. Floods can occur at almost any location from events such as a fast, heavy rainfall; blocked storm drain; or an overflowing stream.
Foundations of buildings and structures below the basement
Homeowners insurance typically covers sudden or accidental damage to below-grade structures of your home. A pipe burst, for example, will be covered. Standard insurance will not cover below-grade damage due to water or sewer backup, water seepage, or storm waters.
General Aggregate Limit
A general aggregate limit is the maximum amount of coverage an insurer will pay during a period of time, typically annually. Once the limit is reached, the insurer will stop paying claims. This is typically part of commercial general liability and professional general liability insurance policies.
General Liability
General liability protects a business from lawsuits from third parties. It covers risks such as customer property damage, customer injury, medical payments, and advertising injury.
Hail Insurance
Homeowners policies often include damage or loss coverage due to hail. This includes roof damage. Some automobile policies will include damage to your car due to hail.
Hired and non-owned auto
Hired and non-owned auto insurance gives liability coverage for property damage and bodily injuries caused by you or your employees while driving for business using a personal or rented car. It also covers defense costs, such as attorney fees or settlements. Coverage can be added to a general liability insurance policy.
Implied Warranty of Habitability
The implied warranty of habitability guarantees rental properties meet health and safety standards. Learn property owner responsibilities and exceptions.
Increased Tax Liability for Rental Income
Landlords can deduct many expenses on their income tax return. These include property taxes, mortgage interest, maintenance, and repairs and cleaning. Homeowners insurance on a rental house also can be deducted on Schedule E (Supplemental Income and Loss). It will be added to your other expenses and become your deductible from your annual rental income.
Insurance Coverage
Coverage is the amount of risk or liability covered by insurance. The insurer will help the insured financially recover loss or damages from an unexpected, sudden, or accidental event, such as a fire or theft.
Loan Protection
Loan protection insurance covers debt payments on some covered loans if the insured cannot pay due to a covered event.
Locks and Keys Insurance
Locks and keys insurance covers the cost to recover or replace your house keys if they are lost or stolen.
Medical Expense
There are two types of medical expense insurance. Basic insurance provides limited coverage for certain types of care. Coverage might include hospital, surgical or physician expenses. It also includes coverage for specific types of hospital visits/stays and procedures. Major medical insurance is a broader coverage plan that is used for more catastrophic medical situations.
Mold, Fungus, Dry Rot and Bacteria
Property insurance coverage for mold, fungi, dry rot, or bacteria is often provided only if it is caused by a covered peril.
Mortgage Holder
The mortgage holder is the owner of your loan and enforces the loan agreement, which includes a promissory note and a mortgage.
Mortgagee Clause
The mortgagee clause is included in a property insurance policy to make sure the insurance company will pay the mortgagee -- also known as the lender -- if loss or damage occurs to a mortgagor’s, or the borrower’s, property. The clause essentially protects the lender from losing money.
Ordinance or law insurance
Ordinance or law insurance covers the cost to upgrade or repair, replace or rebuild a home to current building codes if it is fully or partially destroyed due to an event covered by insurance.
Outdoor fences, radio and television antennas, signs not attached to buildings
Some insurance policies will not include coverage for so-called “other structures” or fixtures such as a detached garage, fences, antennas, and signs not attached to buildings. If other structures are not part of your policy, coverage can be purchased separately.
Peril
An insurance peril is the cause of damage or injury. A policy will cover loss or damage due to specific perils, such as fire, lightning, theft, vandalism, explosion, or a riot.
Period of Indemnity
The period of indemnity is the amount of time that benefits are payable under an insurance policy. In business interruption insurance, the indemnity period typically begins when an event covered by the policy causes a business to lose profit and extends to the time when the policy limit ends or business resumes as usual.
Permission to waive subrogation in favor of mortgage holder prior to loss
Subrogation is when an insurer pays the insured for a loss caused by a third party. The subrogation clause allows the insurer to recover its claims payment from the party that caused the loss.
Personal and advertising injury liability
Personal and advertising injury liability coverage protects a business against claims alleging injuries such as libel or slander. Libel is defamation in written or visual form. Slander is defamation by speech. Coverage also can include offenses such as false arrest or invasion of privacy. This insurance covers intentional acts that cause unintended injury. The injury can be physical, psychological, or financial. It is included in general liability insurance.
Pollution Cleanup and Removal
The cleanup of potential pollution from property damaged due to an insured peril is not always calculated as part of the value of the damaged property.
Pools, Tennis Courts, Playgrounds, Recreational Equipment
Property owners, including co-op and condominium building owners, should insure pools and other recreational equipment. Property and liability insurance cover these amenities.
Products-completed operations
Products-completed operations coverage protects against lawsuits from customers alleging property damage or injury due to your product or completed service. It typically is part of a general liability insurance policy or a business owner’s policy.
Professional Fees
Professional fees insurance covers fees for experts such as attorneys, architects, engineers and accountants who are providing services for settling a claim.
Property Insurance
Property insurance includes coverage for risks to property. It also can include business interruption insurance to provide income loss if your business must close due to a covered event.
Rent Guarantee Insurance
Rent guarantee insurance—also known as rent default insurance—is a risk management product that can protect you against financial loss if tenants are unable or unwilling to make rent payments.
Rental Income
Let's talk rental income — what is rental income? How do you estimate your rental income? Find out here.
Replacement Cost Value (RVC)
Learn how replacement cost value works for property insurance, and how it differs from actual cash value.
Retaining walls that are not part of a building
A retaining wall detached from a building might be covered under homeowners’ insurance if damaged due to a covered loss, such as fire or wind. Insurance policies often cover 10 percent of structural damage. But coverage may not be provided if it was not due to a covered loss. For instance, a retaining wall damaged by earth settling or water damage, or due to negligence or poor maintenance will not be covered.
Roadways, walks, patios, and other paved surfaces
A Commercial Property Policy (CPP) often covers furniture, fixtures, machinery, equipment stock, and personal property. However, it may exclude insurance coverage for damage to roadways, walks, patios, and other paved surfaces.
Service Line
Service line insurance coverage protects homeowners from the risk that pipes or wiring coming into their properties are damaged. The insurance reimburses costs for damage to pipes or lines the homeowner is responsible for.
Signs Insurance Coverage
Insurance can be purchased to cover risks of damage to a business’ signs.
Stop Gap
Stop gap coverage fills a gap in an employer’s workers’ compensation insurance by buying an additional policy. This helps protect business owners from lawsuits filed for workplace injuries.
Sublimits
Sublimits in an insurance policy are the maximum amount of coverage available for a specific peril, such as a storm. A sublimit also may apply to a type of damage or cost, such as debris removal, or an item, such as jewelry. Sublimits are written as a dollar amount or as a percentage of the coverage.
Tenant Relocation Expense
Tenant relocation expense insurance provides benefits when rented housing is made uninhabitable due to loss by fire. Typically, the landlord of the property carries the insurance.
Terrorism Insurance
Property owners can buy terrorism insurance to cover losses and liabilities in the event of terrorist activities.
The Fair Housing Act
The Fair Housing Act was enacted in 1968 by the federal government to prohibit discrimination by housing providers in the private or public purchase, sale, rental, or financing of housing. Read this article to learn more about who is protected and what is prohibited under the Act.
Theft Insurance
Theft insurance covers personal property loss from burglary, robbery, and other theft. Coverage may also include property damage caused by a break-in, such as a broken window or lock.
Trees, Shrubs, Plants, Lawns
Homeowners insurance policies typically cover the cost to replace trees, shrubs, and plants due to certain perils, such as fire, lightning, vandalism, theft, or civil commotion.
Umbrella Insurance
An umbrella policy provides additional liability coverage when other insurance policies have reached their limit. This could include injuries, medical costs, or property damage.
Underground pipes, flues, and drains
Underground pipes, flues, and drains may not be covered under a standard commercial property policy. Some coverage does include underground pipes if the damage is caused by a covered peril, such as frozen pipes. Coverage for underground pipes, flues, and drains may be purchased as an extension or add-on from some insurers.
Utility Service Interruption Coverage
Utility service interruption coverage will cover property damage if a utility supplier experiences damage away from the premises of the insured property due to a covered peril, such as lightning, which then causes damage to your business.
Vacant Buildings
Most homeowners’ policies exclude coverage for common perils such as fire, theft, and vandalism if the property is vacant or unoccupied. Most insurance policies deny claims on properties left vacant or unoccupied for longer than 30 days.
Valuable Papers and Records
Valuable papers and records are a type of property-casualty insurance that covers the cost to restore or reproduce documents that have been lost or damaged by fire or another peril. Businesses and individuals can purchase this coverage.
Vandalism Insurance
Vandalism insurance protects against losses sustained due to vandals intentionally damaging or defacing your property without consent.
Water Damage Insurance
Most homeowners policies include water damage insurance. It generally covers sudden and accidental water damage. It does not cover damage due to a homeowners negligence or failure to maintain a property.
Wind Insurance
Homeowners insurance often includes coverage for wind damage. Coverage will include damage to a home’s structure, such as the roof or windows, along with personal property damaged by wind.
Wind or Hail Deductible
A wind or hail deductible is a separate, higher deductible that applies to loss due to wind or hail. This means you would pay the deductible before the insurer would pay for any damages to your property caused by wind or hail. This deductible is most common in tornado-prone states, such as Texas, Oklahoma, Kansas, Nebraska, and Ohio.

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Obie simplifies the investment property insurance process, minimizes risks, and enhances borrower experiences—keeping your operations smooth and your clients satisfied.

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