Guide to Landlord Insurance: What It Is and Who Needs It | Bankrate (2024)

Ashlyn Brooks

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Key takeaways

• If you rent out your home for long periods of time, you will likely need landlord insurance to protect you financially if your home is damaged.
• Landlord insurance covers many of the same things as standard homeowners insurance, but they are not the same. Homeowners insurance is not likely to cover damage if you are renting out your home.
• Landlord insurance typically costs about 25 percent more than standard home insurance, according to the Insurance Information Institute (Triple-I).

What is landlord insurance?

If you own a building or part of a building that you plan to rent out to a tenant, you may consider purchasing landlord insurance for added financial protection. What landlord insurance covers is not unlike what a home insurance policy covers, but it’s when the coverage kicks in that separates the two. Most home insurance policies will only provide coverage if the owner is living in the building. A landlord insurance policy can protect a home even if it is not occupied by the owner.

Let’s say you plan to travel for several months and decide to rent out your home. While you’re away and your home is tenant-occupied, your windows are smashed in a hailstorm. In this case, your home insurance policy might not cover the damage to the windows. Although hail is likely a named peril on your home insurance policy, your policy may not be in effect because you were not living in the house when the damage occurred. Without a landlord insurance policy, you might be forced to pay out of pocket for the repairs.

Who needs landlord insurance?

Whether or not you need landlord insurance will mostly depend on how often you are renting out your home to a tenant and how long they are staying. Below are some common scenarios where you may want to consider purchasing landlord insurance:

• Long-term property host: If you rent your home or apartment out for a period of six months or longer, landlord insurance can give you added peace of mind while you’re away.
• Occasional property host: If you only list your home as a short-term rental on a platform like VRBO or Airbnb for a few weekends per year, your home insurance policy might provide coverage for the rental property. But, to be covered, you may need to contact your insurance provider or purchase a home insurance rider.
• Regular short-term property host: If you regularly list your home on Airbnb or VRBO, your home may be considered a business. In that case, you might need to purchase a commercial insurance policy instead of landlord insurance.

In general, renters are not held liable for much of the damage that can occur in a rental property. Instead, it is the property owner who is usually liable. Of course, there are some situations where a tenant is considered at fault, but these tend to be less common.

Types of landlord insurance coverage

When you buy a standard landlord insurance policy, you get a broad variety of coverage. Each of these coverage types is subject to deductibles, and limits and can vary between policies. Most landlord insurance includes coverage for:

Dwelling coverage

Dwelling coverage is one of the most important parts of a landlord insurance policy. Just like a home insurance policy, the landlord insurance policy covers you financially for damage to the structure of the home against specific perils. Covered threats generally include damage from fire, wind, storms, hail and lightning.

If something happens to your property’s physical structure, dwelling coverage may help pay for repairs. For instance, if a tree limb were to fall on the house and cause damage, dwelling coverage could help. Depending on your insurer, dwelling coverage may extend to other structures on your property like a shed or garage, too.

Liability protection

This portion of your landlord insurance is especially important. When you have tenants, you’re more exposed to risk. Fortunately, your policy covers your liability so you can rest easy knowing that even if your tenant slips on a step and tries to sue you, you’re covered. Landlord liability insurance helps with medical expenses and accidental injuries. Because property owners are generally liable for what happens on their property, this is an essential piece of any landlord insurance policy.

Personal property coverage

If you don’t store any personal property in your rental, you may not need this protection. But if you rent your building furnished or leave personal property — like security cameras or lawnmowers to service the property — in place, personal property coverage on a landlord policy can offer some protection.

Loss of use coverage

Additionally, some rental property insurance policies include loss of use coverage, which steps in to cover missed rent payments if your rental becomes uninhabitable due to a covered peril. For example, if your tenant has to move out for a month so you can complete repairs after a fire, loss of use coverage may help compensate you for the rent you won’t be able to collect.

Experts recommend reviewing your policy options and talking with an agent to customize your landlord insurance policy to meet your needs.

Additional landlord insurance coverage options

Like many insurance policies, a landlord policy can be highly customizable to your unique insurance needs. But, if you do want to add additional endorsem*nts to your landlord insurance policy, your premium will likely increase as a result.

Vacant property endorsem*nt

Your landlord insurance policy may not cover your home if it’s unoccupied for more than 30 days. Adding a vacant property endorsem*nt could help protect your home from a covered loss even if your property isn’t rented out for a period of time.

Vandalism endorsem*nt

Vandalism is not always covered by a landlord insurance policy. If your rental property is in a high-crime area, adding a vandalism rider might be a wise idea.

Burglary endorsem*nt

Damage that results from a burglary, like a broken window, will likely be covered by a landlord insurance policy. However, an additional burglary endorsem*nt may reimburse you if specific maintenance-related items, such as a lawnmower or a snow blower, are stolen.

Building code endorsem*nt

It’s possible that your local building codes have been updated since your home was built. If your home needs repairs, a building code endorsem*nt could help with the additional costs required to meet the new codes.

Where to purchase landlord insurance

Getting the best landlord insurance is a lot like getting any other insurance policy. The best way to understand your coverage options and to make sure you’re getting the best price is to shop for policies from multiple insurance providers.

Some of the insurance carriers who offer landlord insurance include:

• Allstate: Allstate connects you with a local agent who can help you customize your landlord policy.
• Farmers: Farmers gives you customization options so you can create the right policy for you.
• Geico: Geico offers both home and condo landlord insurance and has an online quoting tool so you can start the process easily.
• Liberty Mutual: The online quoting tool helps you start the process of securing coverage quickly and easily.
• Nationwide: The standard landlord insurance policies include loss-of-use coverage.
• State Farm: State Farm offers coverage for both rental homes and condos.

Some smaller carriers may offer landlord insurance, too. If you’d prefer a policy from a smaller agency, you may want to reach out to an independent insurance agent.

How much does landlord insurance cost?

Even if you’re convinced you need this type of coverage, you’re probably wondering about the cost of landlord insurance. Be prepared to pay more than you paid for your home insurance policy. Per Triple-I, landlord insurance costs about 25 percent more than standard home insurance, which is $1,687 per year on average for $250,000 in dwelling coverage.

Higher landlord insurance rates come down to the increased liability that comes with housing tenants. Not only are they more likely to litigate for things like slip-and-fall accidents, but renters also tend to be more negligent about maintenance than homeowners. This increases the risk of incidents that could result in an insurance payout.

The best way to make sure you’re getting the most affordable insurance possible is to get landlord insurance quotes from multiple providers. Compare them to lock in the best price for your coverage.