Rental property insurance: What does it cover & when do you need it?

If you rent out your house infrequently and for short periods of time, your homeowners insurance may provide coverage if you let your insurer know it’s being rented in advance.

But if you rent out your home for months or years at a time, you’ll need rental property insurance, also called landlord insurance, to cover the unique risks that come with renting out property.

What does rental property insurance cover?

If you rent out your property long term as a source of income, you’ll need rental property insurance. Rental property insurance includes the following coverage:

• Dwelling coverage: Covers the physical structure of the rental property if it’s damaged by a covered peril, including fire or a major storm.

• Coverage for landlord’s personal property: Covers items and appliances owned by the landlord, like dishwashing machines, washer and dryers, and items used for maintenance like shovels, rakes, and lawnmowers.

• Liability coverage: Covers legal or medical expenses if a tenant or visitor is hurt on your property and files a lawsuit.

• Loss-of-rent coverage: Also called fair value rental coverage, this reimburses you for missed rent payments if you're unable to rent out property due to a covered loss.

Keep in mind that when you file a claim for property damage or loss, you first have to pay your policy deductible, which is the amount you’re responsible for covering on a claim before your insurance kicks in to cover the loss.

What does rental property insurance not cover?

There are things landlord insurance does not cover, including:

• Tenants’ furnishings or personal belongings. Rental property insurance doesn’t cover damage to a tenants’ personal belongings inside the rental unit. Your tenant will need renters insurance to cover their own property. Check out our guide to learn more about the difference between homeowners and renters insurance.

• Maintenance issues. Wear and tear or maintenance issues also aren’t covered by rental property insurance. Landlord insurance also doesn’t cover negligence, so if you knew about a gas leak and it eventually resulted in a fire or explosion, you likely won’t be covered.

• Damage or loss while the property is vacant. Rental property insurance won’t cover buildings that have been vacant for a certain number of days, so if the duplex you rent out has been empty for a few months and there’s a break-in, your insurer may not cover the loss.

• Flood or earthquake damage. Landlord insurance does not cover damage that occurs due to flooding or earthquakes unless you have additional coverage in your policy.

How much does rental property insurance cost?

A standard homeowners insurance policy costs on average around $1,899 per year, but varies greatly nationwide. Landlord policies generally cost about 25% more than standard home insurance. [1]

One of the reasons landlord insurance costs more is because of the increased protections and risks. When calculating your quote, insurers also take the build, age, location of your residence, and more into account.

→ Estimate your rates with our home insurance calculator

Do I need rental property insurance if I already have homeowners insurance?

Whether or not you need rental property insurance instead of homeowners insurance will depend on if you are renting the home out on a short-term or long-term basis. 

Short-term rentals

If you live at your residence full-time and rent it out infrequently, like for a weekend once every six months, your home insurance may cover you, but be sure to check with your insurance company about it.

If you have short-term rental properties on Airbnb, your insurer may require you to add short-term rental coverage to your policy. Talk to your insurer about how often you plan to rent out your home to make sure you’re properly covered in the event of a loss. 

Long-term rentals

You only need rental property insurance if you have tenants who you rent out your home to on a long-term or full-time basis, like for months or years. Normal homeowners insurance excludes coverage for business property, and a rental property would technically fall under that category since you make an income off of it.

→ Learn more about homeowners insurance vs. landlord insurance 

Rental property insurance companies

Below are a few companies that offer rental property insurance.

• Safeco. Offers comprehensive landlord insurance coverage, like extended dwelling coverage. 

• State Farm. Offers rental property insurance for both homeowner and condo owners. 

• Allstate. Offers landlord insurance policies and discounts. 

• Nationwide. Offers rental property coverage for different types of rental property.