What does landlord insurance cover?

What is landlord insurance?

Landlord insurance is a form of property insurance if you rent out your home for extended periods of time. Traditional homeowners insurance policies exclude coverage for rental properties. So if you have a condo or house that you rent out long term, you’ll need to get a landlord insurance policy instead. 

A landlord insurance policy covers your rental property and some of your personal property, as well as your liability if someone is injured and sues you.

What does landlord insurance cover?

Also called rental property insurance, a landlord insurance policy covers the rental property itself as well as certain types of personal property if it's damaged or stolen. Landlord insurance also covers legal or medical bills if someone gets hurt on your property and you’re found legally responsible.

Property damage

Landlord insurance covers damage to the physical structure of your rental property and some of your belongings. Like homeowners insurance, each category of coverage has a reimbursement limit — the maximum amount your insurer will pay you out for a covered loss. Different coverages also have their own separate deductibles, which you typically choose when you purchase your landlord policy.

Property protection typically includes three different types of coverage:

• Dwelling: Helps pay for damage to your rental property from fire, smoke, lightning, wind, hail, and more.

• Other structures: Covers damage to the detached structures on your rental property, like a detached garage, shed, mailbox, or fences.

• Personal property: Covers your personal belongings that are an essential part of your rental property — like your AC unit and lawn mower — but not stuff like clothes or furniture you left at the property. Your landlord policy also won’t cover your tenant’s belongings — they need to take out their own renters insurance policy to cover their stuff. 

Liability insurance

Liability insurance can help pay for legal or medical expenses if someone gets hurt on your property and needs medical attention or decides to sue you over their injuries.

Here’s an example.  

Say your tenant slips and falls down the stairs, and a court rules that your stairwell was not up to code.Your landlord liability coverage would help pay for a lawyer and cover your tenant’s medical expenses. 

Loss of income insurance

Landlord insurance may reimburse you for loss of income if your rental property becomes temporarily uninhabitable due to a covered loss, like fire damage. This coverage only protects you for a certain amount of time, depending on your policy limits and how long it takes to rebuild or repair your rental property.

How much does landlord insurance cost?

Landlord insurance policies typically cost about 25% more than a standard homeowners policy. Considering the average cost of homeowners insurance is $1,899 per year — you can expect to pay an average of around $2,374 per year for landlord insurance. [1] That said, the cost of landlord insurance will vary by state and also depends on the build of your home, your roof, and other factors.

What does landlord insurance not cover?

There are certain instances and losses that a standard landlord insurance policy will not cover, including:

• Tenant’s personal property. Landlord insurance protects your property, but not your renter’s — that’s what renters insurance is for.

• Maintenance and wear and tear. Landlord insurance doesn’t cover property damage resulting from maintenance issues or general wear and tear. As the landlord and property owner, it’s on you to keep up with the general maintenance of your home.

• Pest infestations. Coverage is also excluded for pest infestations, since they are seen as preventable with general everyday upkeep.

• Shared property. If you live in a shared property and rent out a spare room, you may be ineligible for landlord insurance since the property technically isn’t non-owner occupied.

• Flooding and earthquakes. Like homeowners insurance, landlord insurance excludes natural disasters like floods and earthquakes. However, you can purchase standalone flood insurance or earthquake insurance policies for the rental property.

Additional landlord insurance coverage options

Consider adding the following coverage options to your landlord insurance policy for extra protection. 

• Rent guarantee insurance. Covers rent payments if a tenant falls behind on their rent. Landlords typically pay for this coverage, however you can write it into the lease to require tenants to pay it. 

• Flood insurance. Landlord insurance excludes coverage for flood damage. Consider adding on flood insurance coverage to protect yourself against flood damage. 

• Vacant and unoccupied home insurance. Insurance companies don’t cover vacant property. If your rental property is vacant for more than 30 to 60 days, talk to your insurer about getting specialty vacant and unoccupied home insurance coverage.  

Landlord insurance vs. homeowners insurance

Although they contain similar coverages, homeowners insurance is meant for homeowners — people who own and live in their place of residence on a full-time basis. On the other hand, landlord insurance policies are designed for non-owner occupied residences.

Since homeowners insurance excludes coverage for rental properties, you’ll need landlord insurance coverage to protect your rental home, belongings, and personal liability.

→ Learn more about homeowners insurance vs. landlord insurance

Do I need landlord insurance if I rent out my property on Airbnb?

You may need landlord insurance if you Airbnb your property for extended periods of time. Airbnb offers their own insurance coverage, but it isn’t always enough coverage to fully protect your rental. 

• Host protection insurance. Covers up to $1 million in liability coverage if a guest files a lawsuit

• Host guarantee. Reimburses you up to $1 million if a guest severely damages your home.

Though this protection seems like a lot, it isn’t necessarily enough because it does not offer coverage for natural hazards or burglary. Landlord insurance may be a smart choice if you Airbnb your rental property long term. But for short-term rentals, depending on your insurer, you may be able to purchase home-share, vacation, or short-term rental coverage to add to your existing home insurance policy.

→ Learn more about Airbnb and homeowners insurance