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Landlord Insurance

The Complete Guide to Landlord Insurance

Because you need just as much protection as your tenants do.

landlord insurance

When you rent out a living space to others, you've got to think about all kinds of risks that could affect not only them, but also your property. It's crucial to be set up with the proper protection before you ever hand out those keys. That means having the right landlord insurance.

Fortunately an independent insurance agent can help you get set up with all the landlord insurance you need. Better yet, they'll get you equipped with this coverage long before you ever need to file a claim. But first, here's a closer look at landlord insurance.

What Is Landlord Insurance?

Simply put, landlord insurance is a type of business insurance designed to protect landlords. This coverage protects landlords from many types of risks, including lawsuits and property damage. After the core coverages are taken care of, it's possible to customize your landlord insurance policy to best meet your needs. An independent insurance agent can help.

Why Do I Need Landlord Insurance?

Landlord insurance protects you if someone gets hurt on your property, or if your rental property itself gets damaged or is temporarily uninhabitable after a covered disaster. These coverages for rental properties are extremely limited in homeowners insurance policies, which creates the need for a separate policy in landlord insurance.

From a personal standpoint, as soon as you start renting out your property to others, you've got to step up your coverage to landlord insurance. Commercial rental properties also need landlord insurance from the start. Landlord insurance provides crucial protection for many different disasters, from appliance malfunctions to wildfire damage and more.

Who Sells Landlord Insurance?

Landlord insurance is available from many different insurance companies, and the best way to find the right carrier for you is through working with an independent insurance agent. They know which insurance companies to recommend to meet your needs, and can provide informed suggestions based on company reliability, rates, and more.

While many insurance companies could create a landlord insurance policy for you, finding coverage could also depend on the area you live in. Here are a few top picks for landlord coverage.

Top Landlord Insurance Companies Star Rating
Liberty Mutual
4.5/5 star rating
Nationwide
5 star rating
Allstate
Travelers
5 star rating
Foremost
5 star rating
American Family
4.5/5 star rating

What Does Landlord Insurance Cover?

Landlord insurance offers several types of protection for those who rent out their property to third parties, either privately or commercially. Here are some of the most common coverages offered in landlord insurance.

  • Commercial property insurance: This covers damage to your rental properties due to fire, natural disaster, theft, vandalism, and more. The dwelling or structure itself is covered, as well as other structures on the property and property used in the maintenance of the rental.
  • Liability insurance: This covers the cost of legal representation and any damages if you’re sued by your tenants or third parties who visit your property, for claims of personal property damage or bodily injury.
  • Loss of income: This covers suspensions of income from your rental properties if they become uninhabitable or you stop receiving rent payments for a covered reason.
  • Workers' compensation: If you have employees, workers' comp covers their medical costs if they’re injured, get ill, or even die on the job.

Many insurance companies sell landlord insurance packages that combine all this coverage for you. An independent insurance agent can help you assemble the right landlord insurance package for your private or commercial rental property.

Additional Landlord Coverages to Consider

Though the core of landlord insurance policies across the map provide a lot of critical protection, you may need to customize your policy further. Here are some commonly added coverages to landlord insurance that you should consider for your rental.

  • Vandalism coverage: Vandalism damage typically isn't protected by landlord insurance, and requires added coverage.
  • Burglary coverage: Your landlord insurance will probably pay to repair physical damage to your building after a break-in, but to be reimbursed for stolen property, you'll probably have to add burglary coverage.
  • Rental property under construction coverage: You might need to purchase extra coverage to protect your rental property if it's undergoing renovations or additions.
  • Building codes coverage: When updating your rental property, you might be legally required to update components such as your building's wiring or ventilation, as well. This coverage reimburses you for these additional costs.

An independent insurance agent can help review your existing landlord insurance policy and make additions if necessary, or recommend these extra coverages when shopping for your first policy.

Is Flood Insurance Included?

Flood insurance is an important type of property insurance coverage that protects against damage due to natural floodwaters. If you own a rental property in a flood zone, you’re likely to be required to purchase flood insurance, which may be sold separately from the rest of your landlord insurance. An independent insurance agent can help you add flood protection to your landlord insurance if it’s not already included.

Is Landlord Insurance Required?

Landlord insurance isn’t required by law, but it’s almost always required by lenders and investors. Also, if you’re planning to take out loans to buy your rental properties, you probably won’t be able to do that without landlord insurance.

If you own all your properties and don’t have financing, then you could technically get away without landlord insurance, but not having it really isn't a smart move. Landlord insurance can protect you from bankruptcy, which in turn protects your income stream, reputation, tenants, and employees.

What's Not Covered by Landlord Insurance?

Though landlord insurance provides a lot of critical protection, it doesn't cover just anything. Here are some common coverage exclusions under landlord insurance.

  • Routine maintenance costs
  • Equipment and appliance breakdowns
  • Shared property you rent
  • Tenants' personal property

Tenants should be required to purchase their own renters insurance policy to protect their personal property from fires and other disasters. 

What's the Difference between Homeowners and Landlord Insurance?

There are some key differences between homeowners insurance and landlord insurance, which creates the need for landlord insurance under certain circumstances. Check out the table below to better understand the difference between these important policies.

Insured Event Landlord Homeowners Insurance
Natural disasters (e.g., fire, flood, storm, earthquake) X X
Damage from impact (e.g., fallen trees, car collision) X X
Legal liability X X
Theft (home excludes theft by tenant) X X
Water damage (e.g., burst pipe) X X
Loss of rental income X
Rent default X
Tenant damage X
Legal expenses for taking tenants to court X

An independent insurance agent can further explain the key differences between homeowners insurance and landlord insurance.

How Landlord Insurance Works

Landlord insurance protects you against damage to your property and liability claims. Let’s look at a few examples of how landlord insurance works.

  • Rental property damage example: If lightning starts an apartment fire that causes damage, your landlord insurance can help pay for the repairs. Property damage coverage has limits, and you'll have to pay a deductible before you begin receiving reimbursement. If you have loss of income coverage, you can be compensated for the rental income you'll lose during repairs.
  • Landlord liability example: If a guest gets injured in a fall on your property, you may or may not be held responsible. If the visitor got injured due to negligence on your part, such as icy walkways around your building, they could file a claim against your insurance to cover costs of medical care. 

Note that landlord property damage insurance sometimes pays for tenant damage, and sometimes it doesn't. Taking a rental deposit at the time your tenant signs a lease is a good idea. You can also ask your independent insurance agent if you can add coverage for tenant damage.

How Much Does Landlord Insurance Cost?

Landlord insurance typically costs 15%-20% more per property than comparable homeowners insurance because of the extra coverage included in landlord insurance, like liability coverage. Insuring large apartment buildings is significantly more expensive, with costs varying widely depending on the building’s size, location, age, special features, and any extra risks of natural disaster or crime. 

As of 2021, the average cost of homeowners insurance is about $1,631 per year. Costs vary by location, property features, and more. By that calculation, the average cost of landlord insurance in the US can be estimated between $1,875  and $1,957 per year. An independent insurance agent can help you find exact landlord insurance quotes for your area.

Landlord Insurance Discounts

Insurance discounts work a little differently from the discounts you get at the grocery store. Instead of taking a flat 10% off the top, insurance discounts are typically based on the unique risks and safety features of your business (or home, or car, or anything else you insure).

Landlords pay more for their insurance than regular homeowners, but they may also have access to better discounts. Here are the two most common types of landlord insurance discounts.

  • Adding safety features like security cameras and burglar alarms to your properties makes them safer, which makes your insurance cheaper.
  • Buying landlord insurance for multiple properties can also lower your costs if you insure everything through the same company.

If you’re a veteran or active service member, you may qualify for military discounts, too. 

Independent insurance agents will take the time to get to know you and help you zero in on the discounts you deserve.

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Frequently Asked Questions about Landlord Insurance

Landlord insurance isn’t required by law, but it’s almost always required by lenders and investors. Also, if you’re planning to take out loans to buy your rental properties, you probably won’t be able to do that without landlord insurance.

Yes, you can deduct your full landlord insurance premiums for your rental properties. That's another incentive to make sure you're equipped with the right coverage.

Absolutely, yes. Landlord insurance doesn't cover tenants' personal property, even in disasters like fire that would be protected for the dwelling itself. Many landlords require their tenants to purchase renters insurance before their lease is active.

There are many carriers that offer landlord insurance, but just a few of our top picks for excellent coverage include GEICO, Liberty Mutual, Nationwide, Travelers, and State Farm (best overall).

To file a claim through your landlord insurance, you can start by contacting your independent insurance agent with the details. They'll reach out to your carrier for you to file the claim, and keep you updated through every step of the process.

If you’re renting out part of your own home (like a “mother-in-law" suite or a spare bedroom), then you may not need landlord insurance. You may be able to add on a special rider to your homeowners insurance instead. 

Why Are Independent Insurance Agents Awesome?

It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print, so you know exactly what you’re getting.

There’s no business too small for our gifted independent insurance agents. They have access to multiple insurance companies, ultimately finding you the best landlord coverage, accessibility, and competitive pricing while working for you.

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