What does Landlord Insurance Cover?

Fact-checked with HomeInsurance.com

4 min read

Buying and renting properties can be an excellent source of income. Many landlords purchase investment properties for the sole purpose of collecting rental income through leases. Others may decide to hang onto a former primary residence and rent it instead of selling.

Unfortunately, tenants don’t always treat rented homes with the respect they deserve, and costly repairs often become your responsibility as the property owner. Landlord insurance can help protect you from the financial risk associated with having tenants in properties you own.

What is landlord insurance?

Landlord insurance is a type of policy for individuals who own and rent out up to four units that are not owner-occupied. It covers many of the risks not included in homeowners insurance and rental insurance policies.

Coverage for landlord insurance includes two main types of risk:

  • Property damage coverage: offers protection for structures on the property, personal property that you leave for the tenant to use and loss of rental income resulting from covered damage.
  • Liability coverage: will protect you financially in the event someone is injured while on your rental property.

However, there are many types of claims not covered by landlord insurance. The tenant’s personal property is not covered, and should instead be protected by a separate renters insurance policy taken out by the tenant. You also can’t get landlord insurance if you occupy any part of the property. If you’re renting out a room in an owner-occupied unit, you’ll just need a more robust homeowners insurance.

Which companies offer landlord insurance?

Most major homeowners insurance companies also offer landlord insurance policies. To get the best deal, talk to your current provider and ask about getting a discount rate on landlord insurance by bundling policies.
The Balance named these providers as the best for landlord insurance:

  • Liberty Mutual
  • Allstate
  • State Farm
  • Foremost
  • American Modern
  • MetLife
  • USAA
  • American Family

What is a recommended amount of landlord insurance to carry?

The standard recommended amount of landlord insurnce is $1 million. However, you may need more or less depending on a few factors. The value of the unit should be taken into consideration, in addition to whether you pay a mortgage or own the property outright. You should also carry enough insurance to cover your net worth, or the total value of your personal assets minus your debt. Finally, compare the monthly rental price and make sure your policy’s limit is high enough to cover the cost of lost rental income.

How much does landlord insurance typically cost?

As a general rule, landlord insurance costs about 25% more than a homeowners insurance policy. Landlord insurance is more expensive than homeowners insurance because there’s a higher risk of damage and poor maintenance when the occupier of a unit does not have a financial stake in the property.

What factors could affect how much your landlord insurance costs?

Landlord insurance providers take several factors into consideration when putting together a quote. They include the following:

  • The deductible amount you choose
  • The value of your property
  • Whether you have a mortgage or own the property outright
  • Your credit score
  • Named perils, or causes of damage, covered by the policy
  • Whether the property has features known to cause injury, such as swimming pools or fireplaces
  • The crime rate in your neighborhood

Is landlord insurance required?

Although landlord insurance is not required by law, you may have an obligation to private entities to take out a landlord insurance policy before renting your unit. Talk to your mortgage lender to see whether they require you to have a landlord insurance policy in place even if it’s not required, landlord insurance is important to have since homeowners insurance won’t cover a unit that is no longer occupied by the owner. You may think you’re covered if you require your tenants to have renters insurance, but these policies won’t protect you financially from structural damage or liability.

Simply put, every landlord who rents out four or fewer units should purchase a landlord insurance policy. To be eligible for landlord insurance, any insured properties should not be owner occupied. You also can’t use a landlord insurance policy to cover short term rentals through vacation rental sites like Airbnb.

Frequently asked questions

What does landlord insurance cover?

Landlord insurance covers structural damage to your property, any of your personal possessions that remain in the unit while it is rented, and liability in case anyone is injured while on the property.

Can landlords require renters insurance?

Landlords can absolutely require renters insurance as part of a lease agreement; in fact, many do. This is common practice in order to prevent disputes over damage to the tenant’s belongings. However, renters insurance will not provide the coverage included in a landlord insurance policy, so the best bet is for both renter and landlord to take out their own respective policies.

What is the difference between landlord insurance and rental insurance?

The main difference between landlord insurance and rental insurance is that landlord insurance covers the structure of the rented property, while rental insurance covers the tenant’s belongings inside it. Landlord insurance won’t cover any personal property inside the unit, unless it’s your own property that you have left for the tenant to use.

Why is landlord insurance more expensive than homeowners insurance?

Landlord insurance costs more than homeowners insurance because tenants don’t have any financial stake in the property, and therefore might not treat it as well as they would if it were their own home. Insurers know that rental properties are more likely to be damaged than owner-occupied properties.

Will a landlord insurance policy cover my Airbnb rental?

Landlord insurance policies are not designed for short-term rentals on vacation rental sites such as Airbnb. It’s worth noting that Airbnb provides hosts with liability insurance policy, , but if you’re looking for something more substantial, there are plenty of third party provider options for vacation rental owners.

Can I get landlord insurance for multiple properties?

Most insurance providers no longer consider you an individual landlord if you rent out more than four units. You’ll need a commercial umbrella insurance policy designed for small enterprises.