Compare landlord insurance: Coverage & costs | finder.com (2024)

Landlord insurance protects you if your tenants get injured in your home or damage your property. There are a few different types of coverage to choose from, and the best policy for you comes down to the size, value and construction of your property, and where it’s located.

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What does landlord insurance cover?

This policy offers a range of protection for three critical areas: liability, damage to your rental home and lost income if the rental becomes unlivable.

Am I covered if my tenants don’t pay their rent?

Standard landlord policies don’t cover lost rental income if your renters can’t pay their bills, unless your policy has a broad loss of income clause. But you have several options to keep your business going if their nonpayment puts you at risk:

• Security deposit. Most states allow you to use renters’ security deposit to cover unpaid rent. However, the renter may have to move out before you can deduct the amount.
• Guaranteed rental income insurance. A few insurance companies offer low-cost plans that protect you if renters default on their rent. This option works best if you buy before the renter defaults, since renters must qualify to be covered.
• Low-interest business loans. If you’re between renters or working with a renter in default, you could search for a low-interest business loan to pay property expenses.
• SBA disaster loans. You could qualify for government-backed small business loans with low interest during a crisis, such as a hurricane or mass flooding. Small business administration (SBA) loans give you the option to defer repayments for up to one year.

How much does landlord insurance cost?

Landlord insurance tends to be more expensive than home insurance. A landlord policy should cost between 15% and 30% more than homeowners insurance on the same building. But your exact premium depends on:

• The type of property you own. A five-bedroom house will typically cost more to insure than a two-bedroom apartment, for instance.
• Where the property is located. This can affect the likelihood of you needing to make a claim. For example, a home in an area prone to severe storm and hail damage or in a high-crime area will cost more to insure.
• The value of your building How much would it cost to rebuild your property? The higher this figure is, the higher your landlord insurance premiums will be.
• How secure your property is. If your property has any security features to deter thieves and burglars, these could lower your premium.
• The age and construction of your property. These factors help your insurance company determine how much your property can withstand damage.
• Your claims history. If you’ve made multiple claims on your policy, you can expect an increase in the cost of coverage.

Is landlord insurance legally required?

No, there is no federal or state legal obligation for a landlord to take out insurance. However, some lenders require you to take out a policy before approving your application for a loan. It’s also a good idea to check local city and county laws to find out if you might be subject to additional requirements.

What additional benefits are available for landlord insurance?

Consider a range of coverage options you could add to your landlord policy, including:

• Flood insurance. This covers you if a flood damages your building.
• Vandalism. If your tenant or someone else intentionally damages your property, this can help cover the cost.
• Burglary. If someone steals your snowblower, lawnmower or any other equipment you keep at your property, theft coverage can reimburse you.
• Bringing the building to code. If you repair your building after a covered incident like a fire or storm, you may be required to bring it up to code, bringing the repair costs above what a regular insurance policy will pay for. This coverage can help with the difference.
• Other structures coverage. If your property includes a shed or detached shop, you may want to opt into this additional protection.

Why should I get landlord insurance?

Most landlords benefit from landlord insurance because it:

• Protects your investment. As a landlord, you’re exposed to unique liability risks that don’t affect ordinary homeowners. Your policy should provide financial support to keep your investment property in top shape for current and future renting.
• Provides peace of mind. You can rest easy knowing you can keep your business running even if damage happens to your property.
• Is tax-deductible. Landlord insurance is considered a business expense, which your premium can be claimed as a tax deduction.

Landlord insurance for condo owners

If you’re renting out a condo where part of the building is owned by a condo association, a typical landlord insurance policy won’t cover you. You’ll need to get a rental condo unit-owner policy, also known as a condo landlord policy.

A landlord policy geared towards condo owners can help protect you from liability and cover any damage to the building not already covered by the condo association’s master policy.

What landlord insurance exclusions should I be aware of?

Exclusions vary from policy to policy, but general exclusions you might see are:

Does my policy cover damage caused by pets?

No, landlord insurance is not designed to cover damage to the home caused by your tenants’ pets. But you might find add-on pet liability coverage in case a pet bites someone or damages a neighbor’s property.

If you’re interested in renting to tenants with pets, talk with your insurer to find out more about how you’re covered and what restrictions to consider.

How to get the most out of your insurance policy

To get the most from your landlord insurance policy:

• Get a signed agreement. Many insurers won’t provide cover if you don’t have an official lease agreement in place that you and the tenant have both signed. Make sure you have a written agreement before a tenant moves in.
• Buy coverage before your tenant moves in. Make sure you purchase coverage before your tenant actually moves into your property. If the home is damaged before your coverage starts, you’ll be left to foot the bill.
• Consider extra coverage if your property is furnished. Landlord insurance generally won’t cover the contents of the unit. If you’re renting out a furnished home, talk with your insurer to find out if you’re covered.
• Conduct regular inspections. Regular property inspections are essential not only to minimize the risk of tenants damaging your property, but to also back up any claim you make on your policy. But make sure you follow all of the laws for notifying your tenant before entering the property.
• Keep detailed reports. Completed entry and exit reports with supporting photographs will protect you if any damage arises.
• Check exactly what’s covered. If you choose a landlord policy that also covers some of the contents of the property, look closely at the fine print to see exactly what is included. For example, check what fixtures and fittings are listed. Most policies offer protection for damage to items such as pipes and cables, fixed appliances, sheds, exterior blinds and awnings, and in-ground swimming pools.
• Require renters insurance. Requiring your tenants to have renters insurance before they move in means that their insurance can pay for liability lawsuits, temporary housing if the building is damaged and potentially your deductible if the tenant damages the home.
• Stay covered while untenanted. It’s also a good idea to check whether you will still be covered if the property is left untenanted for an extended period. You may have to satisfy specific conditions to ensure that coverage remains in place, such as actively seeking a replacement tenant.

Bottom line

If you’re renting out a home or unit, landlord insurance can protect you both legally and financially. To secure the best possible coverage for your needs and budget, compare home insurance policies.

Landlord insurance FAQs

• Yes, in most cases you can claim your landlord insurance premiums as tax deductions.

• The best time to buy a policy is immediately after you purchase your investment property.

• No, but if your policy includes personal injury liability protection it can protect you if you’re sued for wrongful eviction.

• If you decide to stop leasing out your property and use it as your primary place of residence, you’ll need to get a homeowners insurance policy.