Owning rental property comes with opportunities for passive income and long-term financial growth, but it also comes with risks. Unexpected damages, tenant disputes, and lost rental income can quickly turn a profitable investment into a financial burden. That’s where landlord insurance comes in.
Landlord insurance protects property owners from the unique risks associated with renting out a property. While a standard homeowners insurance policy covers personal residences, it doesn’t account for the added liabilities that come with tenants. Whether it’s property damage, legal claims, or lost rent due to unforeseen circumstances, the right landlord insurance policy can provide financial security and peace of mind.
In this guide, we’ll cover everything landlords need to know about landlord insurance—including what it covers, how to choose the right policy, and factors that affect premiums. By the end of the post, you’ll have the knowledge to make an informed decision about protecting your rental property.
What Is Landlord Insurance?
Landlord insurance is a specialized policy designed to protect property owners from financial risks associated with renting out a home or apartment. Unlike homeowners insurance, which covers an owner-occupied residence, landlord insurance accounts for the unique challenges that come with having tenants.
How Is Landlord Insurance Different from Homeowners Insurance?
Many new landlords assume their existing homeowners insurance will cover a rental property, but that’s not the case. Here’s how the two policies differ:
- Coverage for Rental Income Loss – Homeowners insurance won’t reimburse you if your rental becomes uninhabitable due to a covered event, while landlord insurance typically includes loss-of-rent coverage.
- Liability Protection for Tenant-Related Incidents – Landlord insurance includes liability coverage specific to rental properties, protecting against tenant injuries or legal disputes.
- Property Coverage for Tenant Damage – While homeowners insurance covers personal belongings, landlord insurance protects the structure of the rental home and, in some cases, appliances or furnishings provided by the landlord.
Key Coverages in Landlord Insurance Policies
A comprehensive landlord insurance policy includes several types of coverage designed to protect property owners from financial loss. While specific offerings vary by provider, most policies include the following key coverages:
Property Damage
This coverage protects the physical structure of the rental property, including the building itself, garages, sheds, and other attached structures. It typically covers damages caused by:
- Fire
- Storms and natural disasters (except floods and earthquakes, which often require separate policies)
- Vandalism and theft
- Accidental damage caused by tenants
If the rental home is severely damaged, the policy may pay for repairs or even full reconstruction, depending on the level of coverage chosen.
Liability Protection
If a tenant or visitor is injured on the property due to negligence—such as a slip-and-fall on an icy walkway—the landlord could be held legally responsible. Liability coverage helps cover:
- Medical expenses for the injured party
- Legal fees if the landlord is sued
- Settlements or judgments resulting from lawsuits
Without liability coverage, landlords could face significant out-of-pocket costs from lawsuits or injury claims.
Loss of Rental Income
If a rental property becomes uninhabitable due to a covered event—such as a fire or storm—landlord insurance can help replace lost rental income while repairs are made. This enables landlords to continue to meet mortgage payments and other expenses even if tenants are unable to occupy the unit.
Contents Insurance
Landlord insurance typically does not cover a tenant’s personal belongings, but it can protect items owned by the landlord that are inside the rental property. This includes:
- Appliances (stove, refrigerator, dishwasher)
- Furnishings (if renting a furnished unit)
- Fixtures and other landlord-owned property within the rental
For landlords providing partially or fully furnished rentals, contents coverage can help replace or repair damaged items.
Optional Coverages to Consider
While a standard landlord insurance policy provides essential protection, additional coverage options can further safeguard rental income and property investments. Depending on the type of rental and potential risks, landlords may want to consider the following optional coverages:
Rent Guarantee Insurance
Even well-screened tenants can run into financial trouble, leading to missed rent payments. Rent guarantee insurance helps cover lost rental income if a tenant stops paying rent, providing financial stability while the landlord addresses the issue. This coverage typically:
- Pays a portion or full rent for a set period (e.g., three to six months)
- Covers legal costs for eviction proceedings
- Has eligibility requirements, such as tenant credit checks before policy approval
Legal Expenses Coverage
Tenant disputes, eviction proceedings, and property-related lawsuits can lead to costly legal fees. Legal expenses coverage helps landlords cover attorney costs and court fees related to:
- Evictions due to nonpayment or lease violations
- Tenant disputes over security deposits, lease terms, or property conditions
- Defense against liability claims or property damage disputes
Accidental Damage Coverage
Not all damage caused by tenants is intentional. Accidental damage coverage protects against unexpected incidents that aren’t typically covered under standard property damage insurance, such as:
- A tenant accidentally breaking a built-in appliance
- Water damage caused by a tenant’s negligence
- Damage to flooring or walls due to unintentional mishaps
Malicious Damage by Tenants
While most tenants take care of rental properties, some intentionally cause damage, especially in cases of eviction or lease disputes. Malicious damage coverage protects landlords against vandalism, including:
- Broken windows or doors
- Deliberate damage to walls, flooring, or fixtures
- Graffiti or intentional destruction of property
Factors Influencing Landlord Insurance Premiums
Landlord insurance premiums vary based on multiple factors, including the property’s location, condition, and the type of coverage selected. Understanding these factors can help landlords make informed decisions when shopping for a policy.
Property Location and Associated Risks
Insurance providers assess the location of a rental property to determine potential risks. Factors that can impact premiums include:
- Crime Rates – Properties in high-crime areas may have higher premiums due to increased risk of vandalism or theft.
- Natural Disaster Risks – Properties in flood zones, hurricane-prone regions, or areas with frequent wildfires may require additional coverage, increasing overall costs.
- Proximity to Emergency Services – Properties closer to fire stations or police departments may qualify for lower premiums.
Type and Condition of the Property
The physical characteristics of a rental property also play a role in insurance pricing:
- Age of the Property – Older buildings may have outdated wiring, plumbing, or structural concerns that increase the risk of claims.
- Construction Materials – Fire-resistant materials, such as brick or concrete, can lower insurance costs compared to wood-frame structures.
- Size and Value of the Property – Larger or high-value properties often have higher replacement costs, leading to more expensive premiums.
Tenant Profile
The type of tenant occupying the rental property can influence insurance costs:
- Short-Term vs. Long-Term Rentals – Short-term rentals (such as Airbnb properties) are considered higher risk due to frequent tenant turnover.
- Student Housing or Multi-Tenant Units – Properties rented to students or multiple tenants often face higher premiums due to increased liability risks.
Claims History of the Landlord
Just like auto or homeowners insurance, a history of frequent claims can lead to higher landlord insurance premiums. Insurers may view a landlord with multiple past claims as higher risk, resulting in increased costs. Maintaining the property and addressing small repairs proactively can help reduce the likelihood of claims.
How to Choose a Landlord Insurance Policy
Selecting the right landlord insurance policy requires more than just comparing prices. The best policy provides the right balance of coverage, affordability, and reliability. Here’s how landlords can make an informed decision when choosing a policy.
Assess Coverage Needs Based on Property and Tenant Type
Every rental property is different, and insurance needs vary based on factors like:
- Property type – A single-family home may require different coverage than a multi-unit building.
- Tenant profile – Renting to long-term tenants typically presents fewer risks than short-term rentals or student housing.
- Property contents – If renting a furnished unit, landlords should consider contents coverage to protect their appliances and furniture.
Compare Quotes from Multiple Insurers
Insurance rates and coverage options vary by provider, so landlords should:
- Obtain quotes from at least three insurers to compare pricing and coverage.
- Look beyond price—cheaper policies may offer less coverage or higher deductibles.
- Ask about discounts for bundling landlord insurance with other policies (such as homeowners or auto insurance).
Read Policy Exclusions and Limitations Carefully
Not all policies cover every scenario. Before purchasing, landlords should:
- Review exclusions for natural disasters like floods or earthquakes, which may require separate policies.
- Check if the policy includes loss of rental income or if it’s an add-on.
- Understand vacancy clauses—some policies reduce or eliminate coverage if a property is unoccupied for a certain period.
Consider the Insurer’s Reputation and Customer Service
A policy is only as good as the company backing it. When choosing an insurer, landlords should:
- Research customer reviews and ratings on platforms like Trustpilot or Better Business Bureau.
- Check how quickly the insurer processes claims and responds to inquiries.
- Speak with an insurance agent to clarify coverage details before committing.
Common Exclusions in Landlord Insurance
Landlord insurance offers broad protection, but there are key exclusions landlords need to be aware of. Understanding these gaps can help property owners plan for additional coverage or preventive measures.
1. Routine Maintenance and Wear & Tear
What’s Covered? Damage from covered events like fires, storms, or vandalism.
What’s Not Covered? Normal property deterioration, including:
- Aging plumbing, roofing, or electrical systems
- HVAC repairs and appliance failures
- Mold, pest infestations, and foundation settling
How to Protect Your Property: Conduct regular maintenance and inspections to prevent costly repairs and reduce the likelihood of claims being denied.
2. Unoccupied Property Risks
What’s Covered? A rented and occupied unit under a valid lease.
What’s Not Covered? Vacant properties beyond a certain timeframe (typically 30-60 days), which increases risks such as:
- Vandalism and break-ins
- Undetected leaks or water damage
- Liability claims due to unauthorized entry
How to Protect Your Property: If a property will be vacant for an extended period, consider vacant property insurance or take steps to secure and monitor the unit.
3. Tenant Negligence or Intentional Damage
What’s Covered? Accidental tenant damage, such as a pipe bursting due to extreme weather.
What’s Not Covered?
- Tenant-caused fires due to negligence (e.g., leaving a stove on)
- Damage from illegal activities, such as drug operations
- Malicious destruction of walls, appliances, or flooring
How to Protect Your Property: Require security deposits, conduct thorough tenant screening, and consider optional malicious damage coverage.
4. Certain Natural Disasters
What’s Covered? Some policies include windstorms and hail damage.
What’s Not Covered? Certain natural disasters that require separate policies, such as:
- Floods – Requires separate flood insurance
- Earthquakes – Needs an earthquake coverage add-on
- Hurricanes – May have special deductibles or exclusions in high-risk zones
How to Protect Your Property: Check if your rental is in a high-risk area and purchase additional disaster coverage if needed.
The Importance of Regular Policy Reviews
Landlord insurance isn’t something you set and forget. As your rental business evolves, your coverage needs may change. Regular policy reviews help protect your property while avoiding unnecessary costs.
When to Review Your Landlord Insurance Policy
- After Property Upgrades or Renovations
- If you’ve added new features (such as a finished basement, upgraded kitchen, or a new HVAC system), your policy should reflect the increased property value.
- Some improvements may qualify you for lower premiums, such as installing security systems or fire-resistant materials.
- When Acquiring New Rental Properties
- Each rental property may require different types of coverage based on location, property type, and tenant profile.
- Bundling multiple properties under the same insurer may offer cost savings.
- If Rental Income or Expenses Change
- If rental income has increased, your loss-of-rent coverage should be updated accordingly.
- Major changes in property expenses (e.g., increased maintenance costs) could also impact coverage decisions.
- When Local or State Regulations Change
- Insurance requirements for rental properties can change due to new state or local landlord-tenant laws.
- Staying informed about legal updates promotes compliance and prevents gaps in coverage.
- If Your Property Stays Vacant for an Extended Period
- Most standard landlord insurance policies limit or exclude coverage for vacant properties beyond 30-60 days.
- If you anticipate a prolonged vacancy, discuss options with your insurer to avoid losing coverage.
How to Conduct a Policy Review
- Request an Annual Policy Review from Your Insurer – Many insurers offer free consultations to update coverage based on property changes.
- Compare Policies from Different Providers – If premiums have increased significantly, shopping around for competitive rates may help you save.
- Review Exclusions and Policy Limits – Be sure that coverage matches current needs, particularly regarding liability protection and rental income coverage.
Beyond Landlord Insurance: Other Ways to Protect Your Property
Landlord insurance is an invaluable tool for protecting your rental property and financial stability. The right policy helps safeguard against unexpected events that could otherwise lead to significant financial loss.
Choosing the right landlord insurance requires careful consideration of coverage options, policy exclusions, and premium factors. Regular policy reviews guarantee that your coverage keeps up with property upgrades, changing rental income, and evolving local regulations.
Beyond insurance, protecting your property and the investments you’ve made into it requires reliable management. Property management takes a lot of work from handling tenant issues and maintenance needs to spotting financial and safety risks before they become serious issues. A professional property manager can help mitigate these challenges by overseeing tenant screening, property upkeep, and lease enforcement—reducing the likelihood of costly insurance claims.
If you’re considering whether a property manager makes sense for your rental property, check out our free search tool to find the right property management company for your needs.
