Why You Need Landlord Insurance
If you own a property that you rent to tenants, your standard homeowners insurance policy does not cover it. Homeowners insurance is designed for owner-occupied residences, and most carriers will deny claims on properties you do not live in. Landlord insurance (also called a dwelling fire policy or DP-3 policy) is specifically designed for rental and investment properties.
Landlord insurance protects you from the unique risks of being a property owner, including tenant-caused damage, liability lawsuits from tenant injuries, lost rental income when your property is uninhabitable, and damage from covered perils like fire, wind, and hail. Without it, a single lawsuit or major property loss could wipe out your entire investment.
As an independent agency, Better Choice Insurance Group works with carriers that specialize in landlord and rental property coverage, including Steadily, Openly, American Modern, and Travelers. We compare quotes across these specialists to find you comprehensive protection at the lowest available rate.
Landlord Insurance Coverage Types
A comprehensive landlord insurance policy includes four key coverage areas. Understanding each one ensures your investment is fully protected.
Dwelling Coverage
Dwelling coverage pays to repair or rebuild your rental property if it is damaged or destroyed by a covered peril such as fire, windstorm, hail, lightning, explosion, or vandalism. Your dwelling limit should equal the full replacement cost of the structure. This is especially important for landlords, because a total loss without adequate dwelling coverage could mean losing your entire investment with no way to rebuild.
Liability Coverage
Liability coverage protects you if a tenant or visitor is injured on your rental property and sues you for damages. It covers legal defense costs, medical expenses, and court-awarded settlements. Common liability claims include slip-and-fall injuries, dog bites (if you allow pets), and injuries caused by deferred maintenance. We recommend at least $300,000 to $500,000 in liability coverage for each rental property, with an umbrella policy for additional protection if you own multiple units.
Lost Rental Income Coverage
If a covered loss makes your rental property uninhabitable, lost rental income coverage (also called fair rental value coverage) reimburses you for the rent you would have collected during the repair period. This coverage is critical because you will still have mortgage payments, property taxes, and other expenses even when your property is not generating income. Most policies cover lost rent for up to 12 months.
Other Structures Coverage
Other structures coverage protects detached structures on your rental property, such as garages, fences, sheds, and storage buildings. It is typically set at 10% of your dwelling coverage limit but can be increased if you have significant detached structures that add value to your rental.
What Landlord Insurance Does NOT Cover
Knowing the exclusions in your landlord insurance policy is just as important as understanding the coverages. Here are the most common items not covered.
- Tenant Belongings: Your landlord policy covers the building and your property as the owner, but it does not cover your tenant's personal possessions. That is why requiring tenants to carry renters insurance is so important (see below).
- Floods: Like homeowners insurance, landlord policies exclude flood damage. If your rental property is in a flood-prone area, you will need a separate flood insurance policy.
- Normal Wear and Tear: Gradual deterioration, aging systems, and routine maintenance issues are the landlord's responsibility and are not covered by insurance. Regular property upkeep is essential.
- Intentional Damage by the Owner: Any damage you intentionally cause to your own property is never covered.
- Pest Infestations: Damage caused by termites, bed bugs, rodents, and other pests is excluded from standard landlord policies. Regular pest inspections and preventive treatments are your responsibility.
Landlord Insurance vs. Homeowners Insurance
While landlord and homeowners insurance share some similarities, they are designed for fundamentally different situations. Here is how they compare.
| Feature | Homeowners Insurance | Landlord Insurance |
|---|---|---|
| Who lives in the property | You (owner-occupied) | Tenants (non-owner-occupied) |
| Personal property coverage | Covers your belongings (50-70% of dwelling) | Covers landlord-owned items only (appliances, etc.) |
| Lost income coverage | Additional living expenses for you | Lost rental income reimbursement |
| Liability coverage | Covers injuries to guests | Covers injuries to tenants and visitors |
| Typical premium | Lower (owner maintains property) | 15-25% higher (higher risk profile) |
| Tenant belongings | N/A | Not covered (tenant needs renters insurance) |
| Vacancy coverage | Limited (30-60 day vacancy clauses) | Available as endorsement for extended vacancy |
Landlord Insurance Cost by Property Type
Landlord insurance premiums depend on your property type, location, age, construction, and coverage limits. Below are average annual premium ranges for common property types in our service area.
| Property Type | Avg. Annual Premium | Key Considerations |
|---|---|---|
| Single-Family Rental | $1,200 – $2,500 | Most common rental type, easiest to insure, broadest carrier selection |
| Duplex (2 units) | $1,800 – $3,500 | Can often be insured on a standard landlord policy, higher liability exposure |
| Triplex / 4-Plex | $2,500 – $5,000 | Still considered residential (1-4 units), increased liability and lost income risk |
| Multi-Unit (5+ units) | $4,000 – $12,000+ | Requires commercial property policy, fewer carrier options, custom pricing |
These are estimates based on typical policy configurations. Your rate depends on your specific property. Get a personalized quote to see your exact premium.
Multi-Unit & Portfolio Coverage
If you own multiple rental properties, managing separate policies for each one can be expensive and complicated. We offer several solutions for portfolio landlords.
Multi-property policies: Some carriers allow you to insure multiple rental properties on a single policy, simplifying management and often providing volume discounts. This works well for landlords with 2-10 properties in the same state.
Commercial portfolio policies: For landlords with 5+ properties or larger multi-unit buildings, a commercial portfolio policy provides blanket coverage across all your properties. This can include higher liability limits, equipment breakdown coverage, and loss of rents protection.
Umbrella policies: As a landlord with multiple properties, your liability exposure increases significantly. An umbrella policy adds $1 million or more in additional liability coverage above your underlying landlord policies, protecting your personal assets if a lawsuit exceeds your policy limits.
Our agents specialize in building comprehensive insurance programs for landlords at every scale. Whether you own one rental home or a portfolio of 50 units, we can design a program that protects your investments efficiently.
Our Carrier Partners for Landlord Insurance
We work with carriers that specialize in rental and investment property coverage. These carriers understand the unique needs of landlords and offer competitive rates with flexible underwriting.
Steadily is our go-to carrier for landlord insurance. They specialize exclusively in rental property coverage, offer competitive rates, and can insure properties that other carriers decline, including older homes, properties with prior claims, and vacant units awaiting tenants.
Require Renters Insurance From Your Tenants
One of the smartest things you can do as a landlord is require your tenants to carry renters insurance. Here is why.
Protects tenants' belongings: Your landlord policy does not cover your tenants' personal property. If a fire destroys their furniture, electronics, and clothing, they will look to you for compensation, even though you are not responsible. Renters insurance covers their belongings so they are not left with nothing.
Reduces your liability: Renters insurance includes liability coverage for the tenant. If a tenant accidentally starts a fire or causes water damage to a neighboring unit, their renters insurance can help cover the damages before your landlord policy is involved.
Covers additional living expenses: If your rental becomes uninhabitable, renters insurance pays for your tenant's temporary housing. Without it, tenants may pressure you to cover their hotel and relocation costs.
Easy to implement: Add a renters insurance requirement to your lease agreement. Renters insurance is affordable, typically costing tenants $15-$30 per month. Many carriers allow landlords to be listed as an "interested party" so you receive notification if the tenant's policy lapses.
We can help your tenants find affordable renters insurance through our carrier partners, making it easy to enforce this requirement.
Frequently Asked Questions
No. Homeowners insurance is designed for owner-occupied properties. If you rent out your home and file a claim, your carrier will likely deny it because the property is no longer owner-occupied. You need a landlord insurance policy (also called a dwelling fire or DP-3 policy) that is specifically designed for rental properties. If you are converting your primary residence to a rental, contact us to switch your policy before the first tenant moves in.
Landlord insurance covers damage from covered perils like fire, wind, and hail, even if a tenant accidentally caused the event (such as leaving a candle unattended). However, it does not cover intentional damage or normal wear and tear caused by tenants. For intentional tenant damage, your best protection is thorough tenant screening, a solid lease agreement, and collecting an adequate security deposit.
Most landlord policies have vacancy clauses that limit or exclude coverage if the property is vacant for more than 30-60 days. If you anticipate extended vacancies, ask about a vacancy endorsement that extends coverage during unoccupied periods. Some carriers, like Steadily, are more flexible with vacancy than others. Let your agent know your expected occupancy schedule so we can find the right carrier.
There is no limit. We insure landlords with one rental property all the way up to investors with portfolios of 50+ units. For larger portfolios, we can build a comprehensive insurance program that may include multi-property policies, commercial coverage, and umbrella policies for maximum protection and cost efficiency.