Landlord Insurance and Rental Property Coverage (2023)

If you own a rental property, like a house, apartment, or condo, it’s important to protect your investment from damages that may caused by the tenant, natural disasters, or vandalism. Landlord insurance helps protect you and your rental property against costly financial losses, and policies cost an average of $1,748 per year.^[1][2] 

• Landlord insurance protects rental properties from expensive damages.

• A standard policy usually covers property damage, liability claims, and loss of rental income.

• Insurance for landlords typically excludes a tenant’s personal property, maintenance costs, and equipment or appliance breakdowns.

What is landlord insurance?

Landlord insurance, also known as dwelling or dwelling fire insurance, protects landlords and private property investors who own rental homes, condos, and apartments. At any time, tenants or natural disasters can cause costly damages, making landlord insurance an essential investment.

Without landlord coverage, you may face repairs and legal costs related to damage to your rental property. Depending on the situation and the size of the property, damages might cost thousands, hundreds of thousands, or even millions of dollars without coverage. Landlord insurance provides you with the security of knowing you’ll be protected from a financial catastrophe.

Do you need landlord insurance?

Unless mandated by your mortgage company, you’re not required to invest in a landlord insurance policy as a landlord or property owner. But purchasing landlord insurance is a good idea, as it helps protect your financials and assets.

Scott Hammersand, a licensed personal insurance advisor with Overmyer Hall Associates in Columbus, Ohio, explains the importance of landlord insurance, especially for those with a rental property not covered by a home insurance policy.

“Imagine getting a call from the fire department that your rental house just burnt down. The tenant was injured in the fire and is currently in the ICU,” Hammersand says. “Several days after starting the claims process with your home insurance company, you get a call from the company saying your claim has been declined. The reasoning is that your homeowner policy specifically excludes any rental use.”

In this scenario, you would be responsible to pay for the demolition and removal of your damaged property. Plus, if your tenant sues you over their injuries, you could be on the hook for court costs and settlements as well.

“Financially, this would be devastating, as the total cost of losing the house and settling the lawsuit could easily reach over a million dollars,” Hammersand adds. “Had you chosen to switch the home into a landlord policy, the financial impact would have been no more than the home’s deductible.”

What does landlord insurance cover?

While each landlord insurance policy is unique, most cover:

• Dwelling and other structures: This part of the policy covers your primary rental unit as well as other structures, like a detached garage, gazebo, or carport. It also pays for any personal property you use to service or maintain the property, such as a lawnmower or snowblower.

• Personal liability: The liability portion of your landlord insurance helps you pay for someone else’s medical bills if they’re injured on your property and you’re deemed responsible, as well as your legal bills. For example, liability coverage will kick in if the poor condition of your property’s stairs causes a tenant to fall down, and a court decides you’re liable for the tenant’s medical costs.

• Lost rental income: If you’re no longer able to rent out your rental property because of covered damage, your insurer may reimburse you for the rental income you would’ve received during the repair period. If you make the decision to remodel or upgrade the property, this coverage won’t apply.

See More: Home Insurance and Loss of Use Coverage

What does landlord insurance exclude?

As with all types of insurance policies, landlord insurance comes with coverage exclusions, such as:

• Tenant’s personal property: Unlike a home insurance policy, landlord insurance doesn’t cover personal property or belongings. If your tenant would like protection for items like their furniture and electronics, they need to purchase their own renters insurance policy. A landlord insurance policy solely protects your property and assets as a landlord.

• Shared property: You might not qualify for a landlord policy if you live in a house but rent out your basement or a single room to a tenant. In most cases, you can only insure a unit not occupied by the owner. If you share your property with tenants, you should explore options within your home insurance policy.

• Maintenance: Maintenance is your responsibility as a property owner. Therefore, if your dishwasher or fridge breaks down as a result of normal wear and tear, you’ll need to pay for the repairs out of pocket. A landlord policy only applies to items that face damage from a covered loss.

Landlord insurance based on rental property type

The type of property you rent out determines the ideal landlord insurance policy for you. Take a look at some of the differences between renting out a house and condo as a landlord.

A house or apartment

A traditional landlord or rental dwelling policy will suffice if you’re renting out a house on a long-term or full-time basis. The cost of coverage will depend on the size of your home, where it’s located, any additional costs to repair damage, and the type of coverage you’re looking for.

A condo

If you have a mortgage for your condo, your lender may require you to invest in condo landlord insurance, unless you primarily have short-term rentals that your home insurer offers coverage for. Factors like the age of your condo, its location, your claims history, credit score, and deductible all play a role in the price you pay.

Learn More: 5 New Landlord Tips for Renting a House

How much does landlord insurance cost?

A landlord policy costs about 25% more than a standard home insurance policy, based on data from the Insurance Information Institute. The national annual premium for home insurance averaged $1,398 in 2021, so landlord insurance likely averages around $1,748 per year.

Rates vary greatly among companies, so the insurer you choose will determine what you pay for landlord insurance, in addition to your location, deductible, property type, and any discounts you qualify for.

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Best landlord insurance companies

If you’re shopping for landlord insurance, here are some insurers to consider.

Farmers

Farmers allows you to customize your landlord insurance. You can add on optional coverage, like loss of rental income, personal property, personal injury, and other structures. Farmers also offers a SmartMove feature, which runs credit reports on new tenants.

Travelers

Travelers landlord policies are designed for rental properties with one to four units, such as apartments, condos, and single or multi-family homes. They cover premises liability with limits of $100,000 or higher, medical payments of $1,000 or higher, other structures, and loss of use.

See More: Homeowners Insurance Companies with the Cheapest Quotes

Landlord insurance discounts

Landlord insurance discounts can make your rental property more affordable. Some of the most common discounts include:

• Safety discounts: You might qualify for a safety discount if you can prove you maintain your rental property or invest in special safety features, like sprinklers and security systems.

• Bundling discounts: Bundling your landlord insurance with a different policy from the same company, like home or car insurance, often results in a discount.

• Group discounts: A group discount may be available if you’re in a certain profession or part of a particular association, company, or organization.

• Loyalty discounts: If you’ve had a relationship with an insurance company for a long time, the insurer might reward you with a loyalty discount.

Additional ways to save on landlord insurance

These tips can help lower your landlord insurance costs:

• Shop around. Not all landlord policies will work for your insurance needs. You should shop around and compare all your options before committing to one insurer.

• Improve your credit. Your credit score can affect your premiums. If you work to boost your credit score, you may qualify for lower rates. Pay your bills on time, and use caution when applying for new credit.

• Increase your deductible. A deductible is what you pay toward a covered loss. A higher deductible reduces your premiums.

See More: What a Landlord Cannot Do

Landlord insurance FAQs