Guide to landlord insurance: What it is and who needs it

What is landlord insurance?

Landlord insurance is similar to homeowners insurance in that it can help protect you from financial hardship in the event your property is damaged or destroyed. Whether a home is sufficiently covered by homeowners insurance or requires landlord insurance depends on who resides there. Most home insurance policies will only provide coverage if the owner is living in the building. A landlord insurance policy covers 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 coverage 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.

If you own a building or part of a building that you plan to rent out to a tenant, it can be helpful to speak with a licensed insurance agent to determine if you need landlord insurance.

Who needs landlord insurance?

Whether or not you need landlord insurance will mostly depend on how often you rent your home and how long a tenant is 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 sure, you may want to contact your insurance provider and, if necessary, 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 occurs in a rental property. Instead, the property owner is usually liable. Of course, there are some situations where a tenant is considered at fault, but these tend to be less common.

What landlord insurance covers

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:

Dwelling coverage

Dwelling coverage is one of the most important parts of a landlord insurance policy. Just like a home insurance policy, a 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, lightning and a handful of other hazards.

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 coverage

Liability insurance protects you if you are found to be at fault or negligent in the event someone is injured while on your property. If a broken stair causes your tenant to trip and break a leg, for example, liability landlord insurance may pay for your legal defense if they decide to sue you. Depending on the policy, it might help pay for medical costs following an injury, as well.

Personal property coverage

You may not need this protection if you don’t store any personal property in your rental. But, if you rent out a furnished home or leave personal property there — like security cameras or lawnmowers to service the property — personal property coverage on a landlord policy can offer peace of mind.

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, landlord insurance can be customized to suit your needs. If you want to add endorsements (also called riders) to your policy, your premium will likely increase, though.

Vacant property endorsement

Your landlord insurance policy may not cover your home if it’s unoccupied for a period of time, typically 30 to 60 days. Adding a vacant property endorsement could help protect your home from a covered loss even if your property isn’t rented out for a period of time.

Vandalism endorsement

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

Burglary endorsement

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

Building code endorsement

It’s possible that local building codes have been updated since your home was built. If your home needs repairs, a building code endorsement 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. To learn about coverage options and make sure you’re getting the best price, shop around with multiple insurance providers.

Some of the insurance carriers that 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.
• Liberty Mutual: Liberty Mutual's online quoting tool may be a convenient way for tech-savvy landlords to secure 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?

If you’re wondering about the cost of landlord insurance, be prepared to pay more than you paid for your homeowners insurance. Per Triple-I, landlord insurance costs about 25 percent more than a standard home insurance policy.

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.

Frequently asked questions