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Colorado is a beautiful part of the country, and it is no surprise that people love renting and owning rental properties in the area. That said, it also has its fair share of risks.
Ice, fire, water, and wind can all wreak havoc on Colorado properties, and protecting your investment is vital. If you own rental property in the Highest State, you need landlord insurance.
What is Colorado landlord insurance, what does it cover, and why is it so important? This comprehensive guide has all the answers you need.
Rental Costs and Landlord Insurance in the US
There has been a boom in the US rental market of late- and the current rental asking prices are higher than the current national average paid.
At the moment, the average price to rent a home is around $1,370, but with the hike in asking prices, the overall average cost is now over $1,900.
Landlord insurance policies vary significantly in price, and the national average does little to suggest how much you should expect to pay.
The overall average cost of landlord insurance across the US is roughly $2,100- but the cost can be significantly less or more depending on where you live and the features of your property.
What Is Colorado Landlord Insurance?
Colorado landlord insurance coverages apply to owners who have rental properties that other people live in instead of them.
Like a standard home insurance policy, it offers things such as personal property coverage, dwelling insurance, and replacement cost coverage if your property is significantly damaged or destroyed.
No law in Colorado states landlords must take out this type of policy, but most mortgage lenders require it as one of the terms and conditions of the loan agreement.
Landlord Insurance and Homeowners Insurance: What Is the Difference?
There are several differences between homeowners insurance and landlord insurance, but it all boils down to this:
- You need a homeowners insurance policy if you live in the property that you own.
- You need a landlord insurance policy if you own a property but rent it to someone else.
Traditional homeowners insurance policies don't cover your property if you have a tenant living there, but they sometimes cover short-term rentals or house shares. It depends on the company and the policy.
What Does Colorado Landlord Insurance Cover?
Most landlord insurance policies cover the same key areas:
- Dwelling coverage
- Personal property
- Liability coverage
- Additional structures
On top of these options, you can usually opt to add legal liability coverage (pays legal fees in tenant disputes) and loss of rental income protections (covers your lost income if your property becomes uninhabitable).
Make sure you have adequate dwelling coverage to rebuild your property if it is completely destroyed.
What Does Colorado Landlord Insurance Not Cover?
A landlord policy does not provide coverage for personal property that belongs to the tenant.
They need to take out a renters insurance policy to protect their own belongings.
Your policy also will not cover maintenance of appliances or equipment- nor does it pay to replace items that break down from general wear and tear.
It is important to replace old appliances before they leak, as damage caused by something you should have rectified sooner may also be excluded.
Another thing that landlord insurance in Colorado does not cover is intentional damage. If your tenant's malicious actions cause damage to your property, you need to file a lawsuit to recover the expenses.
Water damage from flooding is rarely covered by standard insurance. You should take out a separate flood insurance policy in this case.
When Can Landlord Insurance Help Colorado Landlords and Rental Property Owners?
Landlord insurance helps protect Colorado rental property owners in many ways.
During Harsh Winters when Frozen Pipes or Extreme Weather Cause Damage
Colorado winters are no joke. Severe weather can freeze pipes, cause flooding, or leave structural damage. Having insurance to pay for repairs is a huge deal.
If Someone is Injured on Your Property, and You are Liable for the Expenses
Property liability laws leave landlords responsible for medical bills if a tenant is injured (in most cases). Your insurance can cover these and pay legal fees if the case involves court or lawyers.
When a Rental Property Becomes Uninhabitable Due to Severe Damage
Wildfires, flooding, and avalanches can all cause significant damage and leave your property uninhabitable. Insurance covers the lost rental income during these periods (as long as it is included in your policy).
After a Covered Event that Destroys Furniture or Other Items On or Inside the Rental Property
Most landlords have at least some of their own belongings in their rental property- often expensive items such as large furniture and appliances.
Replacing these can be costly, but landlord insurance covers it as long as the damage was caused by a covered event.
The Cost of Landlord Insurance in Colorado
Trying to predict your Colorado landlord insurance cost based on average figures is tricky.
There are many variables, and rates are calculated based on a number of factors (see below for more details), so there is no guarantee that your insurance coverage cost will be 'average.'
With that in mind, it is important to take general guidelines as just that and not with any expectations.
Overall, the average cost of landlord insurance in Colorado is just over $2,000 per year, or around $170 per month.
How Are Landlord Insurance Policy Costs Calculated?
Each insurance provider has their own way of doing things, but there are some factors that influence the cost of landlord insurance across the board.
- Large, valuable properties need more coverage and are more expensive to insure.
- Properties in areas with a high risk of natural disasters carry a higher likelihood of an expensive claim, so insurance companies charge higher premiums.
- New properties usually cost less to insure- especially if they are built with storm-resistant roofs.
- Having a clean recent claims history usually means lower rates.
In short, costs are usually calculated based on the following:
- Size, value, age, and condition of the property
- Risk level
- Deductibles and coverage limits
- Additional coverage options required
How to Save Money on Your Colorado Rental Property Insurance Rates
The good news is that you can potentially save money on your landlord insurance in a few different ways.
Many insurance companies offer discounts and savings if you meet certain criteria, and there are steps you can take to make your property a less risky prospect for providers- which usually means lower premiums.
Here are some examples.
- Bundle policies together to save money on both.
- Pay annually or via autopay to save money.
- Mitigate storm risk damage with roof enhancements and reinforced windows and doors.
- Instal security features such as fire alarms and smoke detection.
- Screen tenants with DoorLoop to reduce some risk factors.
- Upgrade old appliances.
- Rectify any issues such as mold, rot, or damaged siding before the property inspection.
Top Landlord Insurance Companies in Colorado
If you need landlord insurance, it helps to pick the right insurance agency. Here are five worth taking a look at.
You can get a free landlord insurance quote from many providers online, but some need you to contact an agent.
What Is DoorLoop?
DoorLoop is more than a great place to find helpful information about operating a rental property business. It is also a valuable tool to make your life as a landlord a whole lot easier.
The all-in-one property management solution makes managing your portfolio, finances, and tenant interactions more convenient and efficient- with a user-friendly platform to keep everything connected and accessible on the move.
Some of the services DoorLoop offers include online rent collection, automated reminders and communications, marketing tools, personalized application websites, and tenant screening. You can also use it for accounting, maintenance management, storing documents, and keeping track of your units.
Tenants get their own portal for submitting requests and paying rent, which reduces the number of calls and emails you get and makes it easier for you to handle operations smoothly and time efficiently.
Schedule a free DoorLoop demo today to learn more and see how it can help you!
Final Thoughts
Having a landlord insurance policy may not be a legal requirement (although a lender is very likely to insist upon it), but it is essential.
Landlords in Colorado are exposed to various risks- some from the nature of the rental market and others from Mother Nature herself.
The cost of most landlord insurance policies in the state is a small price to pay for peace of mind and a financial safety net if disaster strikes.
At the very least, it is good to know you won't be alone in paying for repairs or liability expenses.
DoorLoop is also a valuable tool for rental property owners and managers in Colorado. If you want the best for your business and need a way to make life as a landlord more streamlined and convenient, check out DoorLoop today.
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