Landlord insurance, sometimes called a rental dwelling policy, provides protection when you lease out certain types of properties long-term, like your primary residence, second home, or investment property. It doesn’t cover short-term rentals or renting a room inside your home.
Landlord insurance helps you pay for repairs and liability claims after covered events, like a storm or injury. It also covers your belongings on the property, like a lawn mower or snowblower. In some cases, this type of policy also covers loss of rental income as a result of covered events. But landlord insurance doesn’t protect your tenant’s belongings.
When you own a rental property, the right type of insurance policy can help protect your investment and your wallet. Here’s what you should know about comparing home insurance quotes and finding a landlord insurance policy.
A rental dwelling policy, or landlord insurance, offers financial protection for long-term rental properties, including your primary residence, second home, or investment property. If a natural disaster, fire, or other covered peril damages the property, your insurer will help you pay for the repairs. Additionally, landlord insurance covers liability claims if someone is hurt on the property.1
You can’t use standard homeowners insurance for long-term rentals. But if you’re only planning to rent your property for a short time, you may be able to get an endorsement, or rider, from your insurer. Homeowners insurance and landlord insurance don’t cover regular short-term rentals, like Airbnb. You’ll need a business policy instead, like a hotel or bed and breakfast policy.
Take a closer look at the key components of a landlord insurance policy below.
Property protection covers the home itself. Your coverage also typically protects other structures on the property and some of your personal property. For example, a landlord insurance policy generally protects a shed on the property and your contents inside, like a lawnmower used to maintain the property.
Some commonly covered perils include:
Fire
Vandalism
Natural disasters
Riots
Storms
Hail
Your insurer can help you pay for damage if a covered disaster causes damage to the property.
Liability protection helps pay to defend you in lawsuits or pay someone else’s medical costs if they’re injured on your property. It may also help cover legal costs.
For example, if a tenant or their guest falls down and gets hurt, you could be liable. But your landlord insurance policy may help cover the cost of legal fees — and potentially your tenant’s medical bills.
Landlord insurance can help provide peace of mind that your finances are protected in the event you need to cover:
Medical expenses after a tenant (or a tenant’s guest) slips on the property
Legal costs if a tenant sues you for their injury
Landlord insurance may cover some instances of accidental or unintentional tenant damage. But it won’t typically cover damage that a tenant inflicted intentionally.
Accidental damage includes anything the tenant does by accident, like:
Starting a kitchen fire
Flooding the tub
Breaking a window
Landlord insurance also doesn’t usually cover tenant damage that results from intentional acts of vandalism, activities prohibited in the lease, and normal wear and tear, such as:
Starting a fire by smoking, burning candles, or any other cause prohibited in the lease
Vandalizing the home with spray paint, holes in walls or doors, etc.
Scraping floors, scratching walls, or damaging fixtures due to everyday use
Landlord insurance won’t cover every potential issue property owners face. Your policy typically won’t cover the tenant’s personal property, shared property, and maintenance costs.
For example, if the washing machine in your rental house accidentally catches fire, the cost to repair or replace it may be covered. But if the machine broke due to wear and tear or lack of maintenance, you may have to pay to fix it out of pocket or buy a new washer.
Here are some common landlord insurance exclusions:
Routine maintenance
Appliances
Wear and tear
Tenant’s personal items
Intentional tenant damage
Read the fine print on your landlord insurance policy to better understand what your policy covers. Contact your insurance company or agent if an incident occurs to determine whether filing a claim is an appropriate course of action.
The differences between landlord insurance and homeowners insurance are significant. And landlord insurance tends to be more expensive than a standard home insurance policy.
To purchase homeowners insurance, you’ll likely need to live in the home some or all of the time. Landlord insurance doesn’t require you to live on-site and allows for long-term rentals.
Homeowners insurance protects your property, as well as other structures and personal belongings, from covered perils. Landlord insurance also protects the property from peril, but it only covers possessions that belong to you, not the tenant.
Homeowners insurance provides liability coverage against accidents that happen both on and off the property. In contrast, landlord insurance only covers incidents that happen on the insured property.2
The table below breaks down the differences between homeowners insurance and landlord insurance.
The average cost of landlord insurance varies from state to state. The location of your property and associated risk factors, like natural disasters and crime, affect landlord insurance rates.
In general, rental property insurance is more expensive than homeowners insurance due to higher liability coverage limits, protection against some rental income losses, and property damage protection.
To buy a landlord insurance policy, follow these steps:
Here’s a closer look at some commonly asked questions about landlord insurance.
Some insurance companies will cover the loss of rental income after a property suffers a covered loss. For example, if damage from a fire prevents a tenant from living in the property, your insurer might cover the loss of income. But if the tenant is having financial issues, that type of lost rental income generally isn’t covered.
In general, insurers don’t cover the cost of evicting a tenant. Instead, this cost falls to the landlord as a part of doing business.
Landlords with long-term tenants renting out their primary, secondary, or income property need landlord insurance. But if you only rent a portion of your home or rarely rent out the house, then a homeowners insurance policy might be sufficient.
No. Landlord insurance doesn’t cover your tenants’ belongings. Encourage tenants to purchase a separate renters insurance policy to avoid disputes over damaged tenant property.
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Experienced personal finance writer
Background working with banks and insurance companies
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