How much landlord insurance do I really need?

Landlords need enough insurance to protect themselves financially in case of a total loss to their rental property or high-dollar liability claim.

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Rachael BrennanSenior Editor & Licensed Auto Insurance ExpertRachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Edited by

Jennifer GimbelJennifer GimbelSenior Managing Editor & Home Insurance ExpertJennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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Determining exactly how much landlord insurance you need can be tricky. Every landlord situation is a little bit different, but the basics of every rental property policy are essentially the same — property coverage to rebuild the property if it is damaged, liability coverage to pay for damage to other people and their property that you are responsible for, and loss of rental income to replace the income from your tenants if they can’t stay in the property due to a covered peril.

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How much landlord insurance do I need?

Anyone who owns a rental property should buy as much insurance as they can reasonably afford, but there are steps you can take to make sure you are not underinsured.

  1. Assess the cost of rebuilding your property. You’ll be able to choose a sufficient amount of coverage once you know how much it costs to rebuild your rental property after a total loss. You can use our replacement cost calculator to help you determine this. Landlords may also choose to buy additional coverage, such as guaranteed replacement cost coverage or extended replacement cost coverage, to make sure you are fully covered even if inflation or other factors drive up the cost of rebuilding your property.

  2. Determine your liability coverage needs. Liability insurance pays for medical expenses when you’re responsible for someone else’s injuries, like if someone breaks their leg stepping on a rotting floorboard in your property. Without enough liability insurance to cover those costs, you could lose your home, your rental properties, and other assets in court if a judge holds you responsible. You generally want enough personal liability insurance to cover the value of everything you own.

  3. Evaluate your loss of income coverage needs. Landlord insurance provides coverage to replace rental income that is lost due to a covered peril. Known as fair rental value coverage, you’ll want to make sure that you have enough protection to replace rental payments  if your tenants are forced to temporarily relocate while repairs are being made.

  4. Assess the value of your property and assets. Knowing the total value of all of your assets is the best way to make sure you are not underinsured for the above coverages.

Types of landlord insurance coverage

Landlord insurance provides several types of coverage for rental owners, including: 

Property insurance

A portion of your landlord insurance policy is designed to protect your physical property, including the dwelling (the physical structure of your home, including the frame, walls, floors, and roof) and other structures that are on your property, like a detached garage. Your landlord policy also covers some personal property left on premises for the purpose of maintaining the rental unit, like a lawn mower.

Liability insurance

Part of your landlord insurance is designed to protect you financially if someone is injured on your property and you are found responsible. You’ll be expected to pay any medical costs out of pocket if you are found liable for someone else’s injuries and their medical expenses exceed the limits of your liability coverage. This is why you’ll want enough coverage to cover the value of everything you own.

Loss of rental income insurance

Loss of rental income insurance pays for lost income if your rental property is damaged by a covered peril and your tenants are forced to relocate while repairs are being made. However, loss of rental income coverage does not cover mortgage payments, property taxes, utilities, or other expenses that exist even when there is no tenant living in the property. 

Landlord insurance add-ons

There are some things that aren’t covered by a standard landlord insurance policy, like flooding or water backup. Landlords who want additional coverage for these situations can purchase coverage add-ons (typically referred to as endorsements) to supplement their insurance and provide more robust financial protection.

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Do landlords need homeowners insurance?

Landlords need homeowners insurance for their own homes, but homeowners insurance is not the right type of coverage for a rental property. Not only does homeowners insurance not offer all the coverage you need for a rental unit, but your insurance company may deny your claims if they find out you were renting out the property without landlord coverage in place.

Also, keep in mind that your tenant’s rental insurance policy won’t cover any damage to your property, so it is important to have landlord coverage in place to protect your investment property.

How is landlord insurance different from home or renters insurance?

There are several differences between the various types of insurance, including both coverage level and cost. The chart below shows what coverage is included with each type of insurance.

Landlord insurance

Home insurance

Renters insurance

Dwelling

Covered

Covered

Not covered

Other structures

Covered

Covered

Not covered

Personal property

Not covered

Covered

Covered

Loss of use

Not covered

Covered

Covered

Loss of rental income

Covered

Not covered

Not covered

Liability

Covered

Covered

Covered

Medical payments

Covered

Covered

Not covered

Collapse table

Where to buy landlord insurance

Some companies, like Obie and Steadily, only sell landlord insurance. Other companies, like Progressive, Farmers, and State Farm, offer landlord coverage as one of several types of insurance they provide. You can use an insurance marketplace like Policygenius to compare quotes from multiple companies to make sure you’re getting the right amount and type of coverage at  the lowest possible cost.

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Frequently asked questions

What is the rule of thumb for landlord insurance?

When it comes to landlord insurance, a good rule of thumb is to buy enough insurance to: 1) fully replace your rental property if it’s damaged and deemed a total loss and 2) fully cover the cost of all of your assets. Higher levels of liability coverage help protect you from losing your assets, including your personal property and any rentals you may own, if you are held liable for damages to someone else. Also, choosing to buy add-on coverages like flood insurance can help protect you from perils that are otherwise excluded from a typical landlord insurance policy.

What will you most likely need to insure as a landlord?

Landlords need to insure their physical property, including the rental dwelling and other structures. They also need to have liability insurance to protect themselves if someone is injured on the property and they’re found legally responsible.

Why is it important to have landlord insurance?

Landlord insurance protects you financially if your rental property is damaged by a covered peril, like a fire or a break-in, or if someone is injured on your property. Additionally, if you have a mortgage on your rental property, you are likely required to have landlord insurance by your lender.

Author

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Editor

Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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