Explore Landlord Insurance Coverage Options [Detailed Overview]

There are over 19.3 million rental properties in the U.S., and about 2,654 new rentals are available daily. As the number of rental units increases, so does the responsibility of being a landlord.

As a landlord, you can reduce the financial risks of owning a rental property in several ways, such as choosing the right rental markets, carefully screening tenants, and maintaining the home well. 

But sometimes, unexpected events, such as natural disasters or tenant injuries, may occur. Landlord insurance offers extra protection for these situations, which regular homeowners insurance often doesn't cover.

So, let's explore what landlord insurance coverage options are available for you and more. 

Key takeaways

• Landlord insurance is a policy for rental properties.
• This insurance policy covers property damage, liability claims, and loss of rental income.
• Optional add-ons may include vandalism, burglary, and vacant property.
• Landlord insurance doesn't usually cover equipment breakdowns, shared spaces, or a tenant's belongings.
• A landlord may require tenants to get renters insurance to protect their valuables and cover injury claims if allowed by state laws.

What does a landlord insurance policy usually cover?

Wondering, "Do I need landlord insurance, and what does it cover exactly?"

If you own a rental property, you need landlord insurance. Also called a rental dwelling policy, landlord insurance offers extra protection to help investors avoid financial loss.

While a standard home insurance policy provides minimal protection for a rental property, landlord insurance offers much more.

It typically covers property damage and provides liability protection for lawsuits from injured tenants, guests, or repairmen.

Landlord insurance covers all kinds of rental properties, such as:

• Homes rented out to tenants on long-term leases.
• Rental properties with short-term tenants.
• Seasonal vacation rentals.

Although landlord insurance costs and specifics vary from carrier to carrier, landlord insurance typically covers four types of losses.

Property damage 

Does landlord insurance cover the building?

The answer is yes. Dwelling coverage is a crucial part of landlord insurance. Like homeowners insurance, it helps pay for repairs if certain perils damage your rental property. 

Covered perils commonly include damage from wind, storms, fire, hail, lightning, and other threats.

For example, if a tree branch falls on the house and damages it, dwelling coverage can help with the cost of repairs. This coverage may also apply to other structures, such as a garage or shed, depending on your policy.

Liability coverage 

Personal injury law in the U.S. is a $57.3 billion industry. Even the most careful landlord could still face a lawsuit from an injured tenant, visitor, or vendor.

Landlord liability insurance protects you if you're found negligent or responsible for an injury. For instance, if a tenant trips on a damaged stair step and fractures their leg, this insurance can help cover legal costs if they sue you. Based on the policy, landlord insurance's personal liability coverage might also pay for medical bills.

Personal property coverage

You may not require this coverage if you don't keep any personal belongings in your rental. 

However, if you decide to lease your building with furniture or keep personal belongings, such as smart home devices, security cameras, or lawnmowers, on the premises for maintenance, personal property coverage will protect those items.

If you're wondering, "What does landlord contents insurance cover," it includes the following:

• Furniture
• Carpets
• Window coverings
• Lawnmowers and more.

This coverage will protect your belongings against any damage or theft.

Loss of income 

Similar to Loss of Use coverage in homeowners insurance, a landlord insurance policy provides 'loss of rent' coverage if your property becomes unlivable and your tenant has to move out. The insurance company may ask for proof of the rental income you received.

Additional landlord insurance coverage options 

Now that you know what a landlord insurance policy covers, you must be wondering if you can add additional coverage options.

Property owners can add extra coverage to their landlord insurance by choosing insurance riders or endorsements. 

For instance, an insurance provider could cover tenant moving costs if the landlord requires them to vacate while major repairs are done.

Often, vandalism claims aren't covered unless the policy has a vandalism rider. This can be especially important for landlords with properties in high-crime areas or properties that have been vacant for a long time due to renovations.

Here are some optional riders you should include for maximum coverage:

• Burglary: Typically, landlord insurance does not cover home equipment and appliances. Therefore, having an insurance rider, such as burglary insurance, is important. It helps cover the cost of replacing a landlord's personal items used in the rental property, such as kitchen appliances like a refrigerator or oven, a washer and dryer, and tools like a lawn mower or snow blower.
• Vandalism: This optional coverage protects the landlord if the property is damaged by vandalism, such as graffiti, smashed walls, or cement poured down plumbing lines.
• Building codes: Many investors often wonder if landlord insurance covers buildings. Typically, landlord insurance covers buildings and other properties. However, if a rental property is damaged and needs repairs, the policy may require the home to meet current building standards. This could mean updating electrical or plumbing systems, especially if the house is older and the codes have changed. This is where building code coverage helps.
• Vacant property: A landlord can buy this additional coverage if the rental property has been empty for over 30 days. It's particularly beneficial if the property is under construction or being renovated and yet to be rented out.
• HVAC reimbursement: This optional coverage helps cover payments to a tenant if the heating or air conditioning system breaks down. Repairs can take several days in very hot areas, and this coverage helps during that time.
• Personal umbrella policy: A landlord with multiple properties may require additional coverage. If repair costs are higher than what regular insurance covers, this policy provides extra protection.

What are some typical landlord insurance exclusions? 

What should landlord insurance cover but does not? While landlord insurance policies provide different protections, there are a few items it doesn't cover, such as:

Equipment and appliance breakdowns

Typically, landlord insurance does not cover appliances, water heaters, furnaces, or air conditioning systems. For that, you need equipment breakdown coverage.

A landlord might consider getting a home warranty for the rental property to cover the cost of fixing or replacing these items.

Shared property

What does a landlord’s insurance policy cover you for? A lot, but not shared property. 

Landlord insurance is for non-owner-occupied properties. If homeowners rent out part of their home (like a room), they may not qualify for landlord insurance. 

Thus, it's a good idea for the homeowner to check with their insurance company to see if extra coverage is available.

Tenant belongings

Before renting a house, many tenants wonder, "Does landlord insurance cover the tenant's contents?"

Typically, the answer is no. Landlord insurance does not cover tenant belongings if they are stolen or damaged, such as in a burglary or a natural disaster.

Tenants must purchase renters insurance to protect their possessions. This coverage also helps pay for alternative housing if the rental property becomes unhabitable due to a covered event.

Another common question is, "Does landlord insurance cover tenant damage?" In some cases, landlord insurance may cover certain damages to the property caused by tenants, depending on the policy. However, not all types of tenant-caused damage are included, so it's important to review the terms carefully.

Earthquake insurance

FEMA lists California, Missouri, and Washington as the top states for earthquakes. If a rental is in an earthquake-prone area, the landlord may want to look into earthquake insurance to protect their property.

Flood insurance

Landlord insurance often doesn't cover flood damage. Even if your rental house or property isn't in a flood zone, heavy rain or snow melt can cause flooding. 

Besides getting flood insurance, landlords can protect their property by installing a sump pump, grading the lawn away from the house, and directing gutters away from the foundation.

Fire insurance

Fire insurance provides essential protection against losses due to fire damage, which is not typically included in standard landlord insurance policies. Both landlords and tenants should consider purchasing separate fire insurance to safeguard their property and personal belongings from potential fire-related damages.

Still have questions?

Want to know more about what is and is not covered by landlord insurance? Here are some frequently asked questions that may help.

What are some landlord insurance deductibles and coverage limits?

Deductibles vary by policy and represent the amount you'll need to pay out of pocket before your insurance coverage starts. Being aware of the limitations of your new coverage is also important, as they cap how much your insurer will pay on a claim. 

Common deductibles range from $500 to $1,500, depending on the different types of homeowners insurance coverage. A higher deductible typically results in lower insurance premiums, but you must be prepared to pay for smaller repairs out of pocket.

Does landlord insurance cover the tenants' contents?

No, landlord insurance does not cover your tenants' personal belongings. Tenants should be encouraged to purchase renters insurance or HO-3 policy to protect their possessions in the event of damage, theft, or other incidents.

Will landlord insurance provide coverage if a tenant gets injured while on my property?

Yes, landlord insurance typically includes landlord liability insurance, which helps cover medical expenses and legal fees if a tenant or guest is injured on the property.

For example, if a tenant slips on a snow-filled walkway that wasn't cleared, you could be held liable, and landlord insurance would cover the associated costs.

Is the eviction of a tenant covered by landlord insurance?

Landlord insurance doesn't cover the cost of evicting a tenant. However, legal expense coverage as an add-on can help cover some of the legal fees associated with the eviction process. 

Remember that eviction due to non-payment or lease violations is a legal process separate from insurance.

Is landlord insurance more expensive than homeowners insurance?

Landlord insurance is more expensive than the cost of homeowners insurance, as renters are typically not expected to care for the property as diligently as a homeowner would, increasing the risk of potential damage or loss.