California Landlord Insurance
Experts break down landlord insurance costs, coverages, companies, and more.
Maybe you own a condo in San Diego that you lease to young professionals. Or perhaps you own a duplex in Los Angeles that you rent out to students at the University of Southern California.
Regardless of the type of property or where it is located in the Golden State, if you own a home that is occupied by tenants, you can benefit from having landlord insurance.
Independent agents can help you obtain and compare policies and quotes from some of the best landlord insurance companies in California. That way, you can be sure you are getting the coverage you want at the most competitive price. Contact an insurance agent near you to get started.
What Is Landlord Insurance and How Much Does It Cost in California?
Landlord insurance is a type of homeowners insurance policy that is designed to meet the specific coverage needs of property owners who lease to tenants.
On average, landlords in the United States spend about $1,083 a year for their landlord insurance policies. Of course, this is just an average. Your actual rates will be calculated based on the following facts.
- The type of property you own as well as its age, value, and size.
- The crime rate and weather risks where the property is located
- The amount of rent you expect to collect each month
- The number of tenants you have or expect to have occupying the home
As a rule of thumb, landlord insurance typically costs between 15% and 25% more than a traditional homeowners insurance policy would cost for the same property.
Is Landlord Insurance Required in California?
While landlord insurance is not required by law, it may be required by your home insurance provider. Here is how you can tell if your rental property can be covered by homeowners insurance or whether you need to purchase landlord or business insurance instead.
- If you have occasional tenants in your home for short-term rentals, such as if you lease it out once or twice a year while you are on vacation or you rent a bedroom out on a short-term basis, you may be able to get sufficient coverage through an endorsement to your homeowners insurance policy.
- If you have tenants occupying your property for at least 30 continuous days, most homeowners insurance companies will require you to carry landlord insurance instead of homeowners insurance.
- If you frequently rent out your property to short-term tenants, such as if you have it listed on Airbnb or VRBO, or if you own an apartment building, your property will be considered a business, and you will need to cover it with business insurance.
If you are unsure about how to appropriately cover your rental property, you can consult a financial advisor or a local insurance professional.
What Kinds of Property Damage Does California Landlord Insurance Cover against?
The property coverage in your landlord insurance policy comes in two parts: structural (dwelling coverage) and personal property (contents coverage).
With traditional home insurance policies, the contents coverage amount is typically set at 75% of the dwelling coverage. However, as a landlord, your contents coverage needs are lower since your tenants will cover their own personal property with a renters insurance policy.
You will only need to cover the structure of the home and any of the property inside it that you own. This can include appliances, light fixtures, flooring, and any furniture you may include in the home.
Your landlord insurance is designed to cover the cost to repair, replace, or rebuild your property if it is damaged by a covered event.
- Severe weather events: This can include hazards like thunderstorms, cyclones, windstorms, hailstorms, and even the occasional tornado.
- Fires: This can include accidental fires, fires started by lightning, and, in some cases, wildfires. (Renters insurance excludes wildfire coverage in some parts of the state.)
- Property crimes: This can include theft, vandalism, and arson.
- Accidental damage caused by tenants: This includes coverage for damage your tenants might cause, such as while they are moving in and out of the home.
You will want to be sure that you have sufficient coverage to fully replace your property in the event of a total loss.
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What Kinds of Property Damage Are Not Covered by California Landlord Insurance?
As with all insurance policies, landlord insurance has some limitations. For instance, your policy will not cover these situations.
- Intentional damage caused by tenants: If your tenants purposely damage your property, whether out of spite or retaliation, most landlord insurance policies will not provide coverage. The cost of repairs would instead need to be taken out of the tenant’s security deposit or, if the damage is excessive, you will need to sue.
- Normal wear and tear: Nothing lasts forever. If the 20-year-old refrigerator in your rental property breaks down or the HVAC system needs a service call, your landlord insurance will not provide coverage unless these things stopped working due to a covered event like a fire.
- Wildfire damage (in some parts of California): If your property is in an area that has a high risk of wildfire activity, your landlord insurance policy may exclude this hazard from its covered events. Fortunately, you can purchase wildfire insurance coverage through the California Fair Access to Insurance Requirements Plan (“The FAIR Plan”).
- Flood damage: Flood damage is excluded from coverage by all types of home insurance. If your property is at risk, you can get coverage by supplementing your landlord insurance policy with flood insurance through the National Flood Insurance Program (NFIP).
- Earthquake damage: Earthquake damage is excluded from coverage by all types of home insurance. If your property is at risk, you can get coverage by supplementing your landlord insurance with an earthquake insurance policy.
Why Do California Landlords Need Liability Insurance?
Landlord liability insurance is a standard part of every landlord insurance policy. It is designed to cover expenses like court costs, legal defense fees, mediation costs, settlements, and judgements if you are sued for a covered event.
If if one of your tenants or their guests is injured, made ill, or experiences significant property damage and it can be attributed to negligence of upkeep on your part, you can be looking at an expensive lawsuit. Fortunately, you can count on your landlord insurance to cover the associated costs.
If you want to have even more liability coverage than your landlord insurance policy can provide, you can also purchase an umbrella insurance policy. This is an affordable way to significantly boost all of your personal liability coverage.
How Does Loss of Income Coverage Help California Landlords?
Most landlords rely on the income they receive from their tenants’ monthly rent payments. So, what happens if your rental property is severely damaged by a disaster like a fire or a bomb-cyclone and you are unable to have anyone living in it for several months while you bring it back up to code?
Landlord loss of income insurance provides a solution to this problem. This insurance is designed to cover your rental income losses if your property is rendered uninhabitable by a covered event. Coverage can continue until you are able to have tenants occupying the property once again.
Most insurance providers include loss of income insurance as a standard part of their landlord insurance coverage. Others may require you to purchase it as an endorsement if you want to have it. Be sure you are aware of how this is handled by the policy you are considering before you make your purchase.
What Else Can California Landlord Insurance Cover?
Many landlord insurance companies offer a few coverage options. Here are some extra coverage that you may want to add to your policy.
- Non-occupied dwelling coverage: This provides coverage during the times that your rental property is vacant. It is important because many insurance companies will not honor claims for damage that occurred in a home that had been vacant for more than 30 days.
- Building code coverage: This is often useful if you own an older home. Building codes are updated frequently, so the home might not meet today’s criteria. This insurance can cover unexpected extra costs if the property is damaged by a covered event and contractors doing repairs find that additional renovations are necessary to bring it up to code.
- Guaranteed income coverage: This can cover the revenue losses you may sustain if a tenant fails to make rent payments. Coverage can run for a set period of time, which is usually long enough for you to complete the eviction process. Rates are based on how much you are charging in rent and how creditworthy your tenants are.
Be sure that you aware of the various options available to you so you can be sure you are getting all the coverage you need for your investment property in California to stay profitable.
How Can Independent Agents Help California Landlords Find the Best Coverage?
If you want to be sure that you are getting a good landlord insurance policy at a great price, you will need to do some comparison shopping. Independent insurance agents in California make this easy.
In addition to obtaining customized quotes from a few of the area’s best insurance providers, these agents can offer guidance and advice, answer your coverage-related questions, and even help you with any other insurance coverage needs you may have.
It doesn’t cost anything to work with one of these experienced professionals. Find an independent insurance agent near you to get started.
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