The Complete Guide to Landlord Insurance

As a landlord, you have a lot of things to keep track of. Not only do you want to make sure your property is functional for your tenant, you also want to ensure you’re protected from any liability or financial loss should something happen. For both short- and long-term tenants, as a landlord it’s important to make sure you fully understand the coverage you need for a successful lease.

Below our experts will guide you through everything you need to know about landlord insurance (also known as DP3 insurance), including how much coverage you need, average costs and what to file a claim for.

What insurance do I need as a landlord?

As a landlord, you’ll need different insurance than you’d need as a homeowner. A standard homeowners insurance policy only covers homes that are primary residences, so it won’t cover any damage or liability issues that occur when you rent out your home to others.

As a landlord, you’ll need a specific insurance policy that covers your property and extends your liability and dwelling coverage to protect yourself from damages done by your tenant.

But just because your homeowners insurance policy no longer applies, that doesn’t mean that your risk goes away. Quite the opposite, in fact. As a landlord, you’re still responsible for your home’s structure and appliances. You can also be held liable for any injuries your tenants sustain on your property, if it’s found to be caused by your negligence. This is why landlord insurance is so crucial — it protects you legally and financially from anything that may come your way.

What does landlord insurance cover?

Landlord insurance covers your dwelling, other structures on your property, some personal property and liability coverage. But, unlike a homeowners insurance policy, there are some specific caveats to each category of coverage that you should be aware of.

• Dwelling coverage. This protects the structure of your property if it’s damaged by a covered peril such as a fire.
• Other structures. Covers other structures on your property such as fences, sheds and detached garages from damages caused by included perils.
• Personal property. Only your personal property used to maintain or service your property is included in this section. So while a damaged TV you left at the home will not be covered, damaged lawn equipment and appliances would be.
• Liability. While most liability issues will fall under the tenants responsibility, if you are found responsible for an injury on your property, liability insurance will protect you legally and financially.

Determining tenant type

The type of tenant you have will determine what policy and level of coverage you need. While long-term rentals will require more traditional landlord insurance policies, short-term rentals, such as an Airbnb property, need a different policy known as short-term insurance.

Rental hubs have skyrocketed in popularity in recent years, and if you’re a landlord, you’ve probably considered your home for that type of rental. Especially popular in densely populated cities with high tourism levels, short-term rentals can be a great way to bring in extra cash if you don’t want to deal with a tenant 24/7.

However, short-term rental insurance comes with a different set of considerations that are important to be aware of. Since you are technically operating a “business,” your short-term insurance will cover any commercial liability as well as more traditional categories like dwelling and personal belongings coverage. 

It’s often required that you have short-term or landlord insurance when renting out your property, though it’s important to note these two are not interchangeable. It’s important to always be as accurate as possible about how you are using your property, so that you don’t run into issues when filing a claim. To get the coverage you need and avoid any hiccups down the road, talk with your insurance agent about the option that’s right for you before listing your home for long- or short-term rentals.

What does landlord insurance not cover?

Though landlord insurance policies cover similar categories as a home insurance policy, not everything is covered. Understanding the distinction of your new coverage limits is key to keeping your home and financial status protected. So what all isn’t covered by your landlord insurance?

Landlord insurance doesn’t cover:

• Your home if you live in it with the tenant.
• Your tenant’s personal belongings.
• Maintenance or repairs on in-home appliances.
• Your personal belongings that don’t have to do with maintenance/upkeep of the property.
• Damage from certain perils.

First, it’s important to understand what situations qualify for landlord insurance coverage. Say that you plan to lease out one room or a portion of your home while you still live in it. While you technically meet the requirements of a “landlord,” a landlord policy won’t cover any property you share with your tenant. The property must not be your primary residence to secure this type of coverage.

If you qualify for a landlord insurance policy, there are still things that won’t be covered. Examples include any personal belongings of yours that don’t have to do with maintaining the home, as well as any personal items that belong to the tenant. Our insurance experts recommend that you require your tenant to purchase renters insurance to help cover them in case of damage, and keep the financial ramifications from bouncing back to you.

How much does landlord insurance cost roughly?

Just like with homeowners insurance, there are a variety of factors that affect the cost of your landlord insurance policy. Things like the location of your home, age of the home (and its important features like roofs and HVAC system) all contribute to your overall cost. The amount of coverage you get also plays an important part in determining costs as well.

Generally, you can expect to pay upwards of 20% more for landlord insurance than you would for home insurance. So, for example, imagine you paid $1,000 a year on your home insurance policy when your property was your primary residence. Once you begin to rent it out, your annual premium will likely jump up to about $1,200. But there are ways to get that cost down.

Repairing or replacing older features in your home, while costly upfront, can save you a lot in insurance costs over the years. Installing smart home devices is another great way to lower your insurance premiums, as many insurers (like us) offer discounts when you opt for these.

Is landlord insurance more expensive than homeowners insurance?

As mentioned above, landlord insurance is typically more expensive than the average cost of homeowners insurance. This is because of the increase in liability and dwelling coverage you’ll need — these will protect you from medical and legal fees should your tenant decide to sue you for an injury they sustain on the property.

Additional landlord insurance options

To extend your financial and legal protection, there are a variety of endorsements available to add to your landlord policy. From added coverage from common perils to protection for multiple properties, check out all the additional insurance options below. Make sure to chat with your insurance agent about which endorsements make the most sense for you.

• Additional construction. This add-on will help cover costs of rebuilding after a natural disaster or damage, if the cost exceeds your dwelling coverage amount.
• Commercial policy. If you own multiple properties, you may want to consider a commercial policy to help protect larger assets.
• Flood insurance. Protect yourself from flood damage and help lower costs to repair your home should flooding occur.
• Vandalism. Not usually covered in your original policy, vandalism protection helps pay for repairs should your tenant or a guest vandalize your property.
• Loss of rents. Similar to loss of use coverage for home insurance, this covers you from lost income if your property becomes unlivable due to a covered damage (may be covered under your standard policy).

Getting the right coverage can make or break your ability to be a successful and long-term landlord, no matter how you plan to rent out your property. Have any other questions about how a landlord policy differs from your homeowners insurance policy? Head over to our FAQ page for more information or contact our home insurance agents directly.