When you own your home but have another place to live, renting out all or a portion of the house can seem like a no-brainer way to bring in some extra money. Whether you rent your house out for a few weeks each year while you’re traveling or you bring in a full-time tenant, don’t assume your homeowners insurance policy will cover you. Instead, you’ll need landlord insurance.
What is landlord insurance?
If you own a building or part of a building that you plan to rent, you need landlord insurance to protect yourself and the building. Landlord insurance is coverage designed to protect the structure of a home or condo when you, the owner, don’t live in it. Like standard homeowners insurance, it also covers your liability.
Almost all home insurance policies exclusively cover owner-occupied homes. If you’re not living in your house, your policy isn’t in effect — whether you’re renting it for a week or a year.
There are a few options for rental property insurance. If you’re renting out your home to a full-time tenant, a standard landlord policy can offer the protection you need. But if you’re only going to be doing a short-term rental, you may only need to add an endorsement to your home insurance policy.
If you plan to regularly rent out your home to short-term guests, talk to your insurance agent. Your rental may then constitute a business, meaning you need a commercial insurance policy for ample protection.
Types of landlord insurance coverage
When you buy a standard landlord insurance policy, you get a broad variety of coverage. Most landlord insurance includes coverage for:
- The dwelling: Just like a home insurance policy, the landlord insurance policy covers the structure of the building against perils like fire, windstorm, vandalism and more.
- Other structures: Your policy can also protect other structures on your property, like a detached garage or a fence.
- Liability: This portion of your landlord insurance is especially important. When you have tenants living on your property, 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.
- Personal property: 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, protect it with personal property 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 can write you a check for the rent you won’t be able to collect.
Review your policy options and talk with an agent to customize your landlord insurance policy to meet your needs.
No coverage for your tenants’ personal property
Remind your tenants that your landlord insurance doesn’t extend to the personal property they store in the rental. Encourage them to take out a renters insurance policy to protect their belongings and their own liability.
Where to purchase landlord insurance
Getting your landlord policy 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 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 also offers coverage for both rental homes and condos.
Some smaller carriers may offer landlord insurance too. Ask any provider you are interested in if this is something it offers.
How much does landlord insurance cost?
Even if you’re convinced you need this type of coverage, you’re probably wondering about landlord insurance cost. Be prepared to pay more than you paid for your home insurance policy. The Insurance Information Institute (III) says landlord insurance costs about 25 percent more than standard home insurance.
The higher landlord insurance cost comes down to the increased liability you bring on when you have 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 on your property.
The best way to make sure you’re getting the most affordable landlord insurance possible is to get quotes from multiple insurance providers. Compare them to lock in the best price for your coverage.
Frequently asked questions
Does my homeowners insurance cover my rental property?
No. Homeowners insurance policies only extend to owner-occupied structures. Once you start renting, you need to put other coverage in place to protect your building and cover your liability.
Is landlord insurance required?
Although it’s not required by state or federal government, you may still need this coverage. If you have a loan on your home, your mortgage lender will most likely require you to protect their investment in your house with insurance. Talk with them about the coverage they mandate if you plan to rent out your home.
How do I get the cheapest landlord insurance?
Talk to insurance agents about discounts you can secure (e.g., ones for additional safety features on your property) to bring the cost of coverage down. Then, collect quotes from multiple insurers so you can choose the most affordable coverage possible.