Landlord insurance

While renting out all or part of your home can be a lucrative gig, it’s only worthwhile if you have adequate financial protection. Your homeowners insurance policy alone may not be enough, which is where landlord insurance comes in. Although the two are similar in terms of coverage scope, there are several important distinctions landlords should be aware of. Bankrate’s insurance editorial team has put together this guide on ins and outs of landlord insurance so you can better understand it as you decide if it’s right for you.

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've been traveling 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 might wonder if you should 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 from your property. 
• Occasional property host: If you only list your home for a short-term rental on a platform like VRBO or Airbnb for a few weekends per year, your home insurance policy may 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 may 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 held responsible. 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 options are subject to limits and exclusions 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 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. 

Liability protection

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. 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 probably covered. 

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 could step 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 write you a check for the rent you won’t be able to collect.

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 endorsements to your landlord insurance policy, your premium will likely increase as a result.

Vacant property endorsement 

Your landlord insurance policy may not cover your home if it’s unoccupied for more than 30 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-crime area, adding a vandalism rider might be a wise idea.

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 your 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 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 get quotes from multiple insurance providers.

Some of the major insurance carriers that offer landlord insurance include:

• Allstate: Allstate can connect 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 from Nationwide include loss-of-use coverage.
• State Farm: State Farm also offers coverage for both rental homes and condos.

Smaller, more local carriers may also offer landlord insurance as well. 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. The Triple-I says landlord insurance costs about 25 percent more than standard home insurance.

The higher landlord insurance rates come 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 can increase the risk of incidents on your property, which can make you more high-risk to an insurer. 

Although landlord insurance can tend to be expensive, shopping around for multiple quotes might help you lock in an affordable rate.

Frequently asked questions