Rental property insurance: What does it cover & when do you need it?
If you rent out your home for even a few months, you’ll want to purchase rental property insurance (aka landlord insurance), since standard home insurance policies don't cover long-term rental properties.
Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.
Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.
Expert reviewed
Expert reviewed
This article has been reviewed by a licensed Policygenius expert to ensure that sources, statistics, and claims meet our standard for accurate and unbiased advice.
Ian Bloom, CFP®, RLP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, he was a financial advisor at MetLife and MassMutual.
Rental property insurance, also called landlord insurance, is a special type of homeowners insurance that’s specifically designed to cover the unique risks that come with renting out your property. Even if you only rent your home out for a few months at a time, you’ll still need landlord insurance because standard home insurance doesn’t cover business or rental properties.
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 why 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.
When shopping for rental property insurance, it’s important to compare different companies to make sure you’re getting the best coverage possible and at the best price point. Below are some steps you may want to consider taking when shopping for landlord insurance.
Learn about how much coverage you need. How much coverage you need for the structure of your home will depend on its rebuild value, or replacement cost. You’ll want enough coverage to rebuild your home from the ground up in the event of a disaster. You should also consider your liability coverage limits, which protects you against lawsuits if you’re found responsible for someone’s injury on your property.
Get necessary information about your home and how you plan on renting it. You’ll need to provide insurers with information about your home, like its square footage, age, roof type, and more. You’ll also want to inform the insurance company that this is a rental property. They may have coverage considerations for you, and they may advise you to get your tenants to purchase renters insurance.
Compare rental home insurance quotes. It’s a good idea to compare multiple companies to make sure you aren’t missing out on a better deal elsewhere. The agents at Policygenius can help you compare home insurers that offer landlord insurance.
Choose your policy and finalize the details. Once you choose your policy, you’ll want to finalize the details and consider any coverage add-ons you might need, like water backup coverage or equipment breakdown coverage.
4 rental property insurance companies
Below are a few companies that offer rental property insurance. Most of the insurers listed offer policies in all 50 states.
Backed by Liberty Mutual, Safeco Insurance is widely available in most states. The insurer offers homeowners insurance as well as comprehensive landlord insurance options.
Key takeaways:
Safeco landlord policies automatically include extended dwelling coverage, which allows you to raise your dwelling coverage limit by 25%.
The insurer also offers optional inflation protection that you can add to your policy.
State Farm is the largest homeowners insurance company in the country and offers policies in all 50 states. The insurer also sells landlord insurance, along with a few coverage endorsements you can add to your policy for an additional fee.
Key takeaways:
State Farm’s landlord insurance includes equipment breakdown coverage, which pays to repair or replace appliances if they’re damaged by electrical or mechanical breakdown. Other insurers typically offer this as a coverage add-on that costs an additional fee.
Additional coverages you can add to your landlord policy include data restoration and identity theft coverage.
Allstate is the second largest homeowners insurance company in the country. The insurer offers landlord insurance, as well as many opportunities for you to save on your premiums.
Key takeaways:
Allstate offers all the standard landlord insurance coverage options.
The insurer offers coverage add-ons, like rental property under construction coverage, that covers your rental property if it’s being renovated or if you’re building new construction.
You can also get discounts through Allstate, like if you bundle your landlord insurance and auto insurance.
Liberty Mutual offers policies in all 50 states. The insurer sells standard landlord insurance with coverage add-ons available for an additional fee.
Key takeaways:
Liberty Mutual offers standard coverage options for landlords, as well as optional inflation guard coverage in the event the cost of construction materials goes up.
The insurer offers many ways to save on your landlord insurance, including discounts for going years without a claim and buying a policy before your current one expires.
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.
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.
Rental property insurance only includes a limited amount of coverage for the landlord’s personal property
Rental property insurance typically only covers the landlord’s belongings that are used for upkeep — like gardening tools, lawn mowers, and AC units. But if you leave personal belongings — like your clothing or personal art — in your rental unit and it gets stolen or damaged, rental property insurance likely won't cover that loss.
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.
You can purchase separate flood or earthquake insurance
If your rental property is in an area that is high risk for flooding, consider purchasing a separate flood insurance policy. And if your rental is located somewhere that experiences earthquakes, consider adding additional earthquake coverage to your landlord policy — or purchasing a separate earthquake insurance policy.
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- 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.
Yes, if you have a property that you rent out to tenants, then getting rental property insurance is a must. If you plan to take out a mortgage on a rental property, your lender will likely require coverage before extending you a loan.
Does homeowners insurance cover renters?
No, if you rent out property, your rental property insurance will cover the structure of the building and your financial interest in the property, but your policy won’t cover your tenant or guest’s personal property. Your tenant will have to purchase their own renters insurance policy to cover their personal belongings and liability.
Do I need to change my homeowners insurance if I rent out my house short-term?
If you live at your home most of the year and rent out the entire property or a room intermittently, your existing homeowners insurance policy may cover your guests, provided you let your insurance company know the deal beforehand. If you use a home-sharing service like Airbnb, some insurers may require something like a short-term rental coverage add-on to cover liability occurrences while the home is rented out.
References
Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our
Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.
Kara McGinley is a senior editor and licensed home insurance expert at Policygenius, where she writes about homeowners and renters insurance. As a journalist and as an insurance expert, her work and insights have been featured in Kiplinger, Lifehacker, MSN, WRAL.com, and elsewhere.
Ian Bloom, CFP®, RLP®, is a certified financial planner and a member of the Financial Review Council at Policygenius. Previously, he was a financial advisor at MetLife and MassMutual.
