Rental Property Insurance for Landlords: Costs & Coverage 2023
Rental property insurance protects the landlord’s property from damage and loss of income while also guarding against liability. Typically, an average policy on a $200,000 rental property runs from $990 to $1,300 for a condo on the West Coast and $1,600 to $2,400 for a freestanding home in the South.
Obie, an insurance broker, specializes in providing quotes for landlord insurance in minutes. Enter some details about the property you want to insure, and it will email you a quote quickly.
Rental Property Insurance Costs
We received multiple quotes for the following regions. Every quote was for a $200,000 property with a $1,000 deductible. None of the homes used for our quotes have any added amenities like a pool.
Region | Average Annual Premium |
|---|---|
Northeast | $1,200 to $1,700 |
Midwest | $1,300 to $1,650 |
South | $1,600 to $2,400 |
West Coast | $990 to $1,300 |
Insurance for a rental property is usually 25% higher than a standard homeowners’ policy. As a business, the risks and costs are different than for homeowners. For example, carriers do not have to pay a loss of income if your roof needs to be replaced and do not have to factor in the liability from multiple people temporarily living on a property.
Factors That Affect Rental Property Insurance Rates
Beyond the more obvious differences between landlord insurance and homeowners insurance, there are other factors that can affect the premium. Some of these include:
- The geographic location of your property
- Proximity to water
- Building materials, such as mason or wood frames
- Age and condition of your rental property
- The number of units you own
- Replacement cost of your investment property
- Installation of a security or fire suppression system
- Any amenity items, like a fireplace or pool, that are present
When seeking a quote, be prepared to answer questions about those factors and other questions about the home and rental income.
Ways To Reduce Your Rental Property Insurance Costs
There are steps you can take that may help reduce the cost of your premium on your rental property. These include:
- Installing smoke detectors and fire suppression systems. Most providers will ask if you have one installed and take your answer into consideration when developing the quote.
- Ensuring the fire extinguishers are updated and well-placed. While this may not have any impact on your premium, a well-placed fire extinguisher can go a long way toward preventing a claim.
- Reducing vacancy by only renting your property to long-term tenants. Vacant home insurance is additional coverage you can purchase for an added cost.
- Installing a security system and considering a monitoring service. Theft and vandalism are usually named perils in a landlord’s policy. While the security system does not universally prevent crime, it may deter some from breaking in or vandalizing the property if cameras are present.
If you’re interested in learning about security systems, check out or guide to the best security systems for your property.
Rental Property Insurance Coverage
Rental property insurance, or landlord insurance, isn’t only for homes. If you own condos or even an apartment building, this coverage is essential. It matters because landlord insurance provides coverage for you in multiple ways:
- Property damage: Your property is insured in the event that it is damaged by wind, hail, fire, or other named perils.
- Liability: Along with property coverage, landlord insurance includes liability. If you fail to fix a leaky toilet and a tenant or guest slips and falls on the water and is injured, you could be found liable for their medical bills.
- Legal fees: Some policies come with coverage for legal fees to help you with evicting a troublesome tenant.
- Rental income: If you are losing rental income because the property needs to be repaired, rental income can supplement the loss.
Most providers will have three different types of landlord policies available. These are DP-1, DP-2, and DP-3. DP stands for Dwelling Policy, and the numbers correspond to different levels of coverage—with DP-1 being the most basic and DP-3 being the most comprehensive but usually the most expensive.
This is a broad overview—what is covered depends on the policy you select and its named perils, definitions, and exclusions. We recommend reviewing which policy and coverages are best for your business needs with an agent or a broker.
Tips for Purchasing Landlord Insurance
When it’s time to purchase landlord insurance, remember that the type of policy you’ll want, as well as the level of coverage, is going to depend on your business. Follow these tips for finding the right policy:
- Get multiple quotes from different carriers to compare pricing and options before purchasing a policy.
- Don’t be afraid to ask carriers how they handle billing, if they have any grace period, and what happens if you purchase an additional property.
- Ask what the carrier’s process is for claims handling and the average turnaround time from filing a claim to it being resolved.
- Work with the agent to ensure the policy you’re looking for will match your business needs and cover any potential expenses you may encounter while renting out your property.
Note that each carrier has a different approach to assessing risk. Some may find that insuring a building with a long-term tenant is less risky than insuring a homeshare property, such as Airbnb and Vrbo.
Frequently Asked Questions (FAQs)
Generally, a homeowners policy on a rental property, also known as landlord insurance or rental property insurance, is 20% to 30% more than on a primary residence. This varies based on several factors, including the type of property you own, the area where the property is located, discounts available, and costs to replace the property. The level of coverage can also impact the premium.
A landlord insurance policy will usually cover the dwelling or property, loss of rental income protection, and liability protection and losses classified as “acts of God,” like thunderstorms, blizzards, and hurricanes. Depending on eligibility, the landlord policy may have additional options like flood insurance.
Yes, a landlord can require you to have renters insurance. If they do, then it needs to be stated in the lease. Renters insurance protects the tenant’s personal items from theft, property damage, leaks, acts of nature, and so on. Keep in mind that the landlord’s insurance policy does not protect the tenant’s personal items.
Yes, you can usually deduct the premiums, such as fire, theft, and flood insurance, you pay for your rental property insurance, but it is best to consult with your tax professional for specific deductions. For more information on specific rental property deductions, check out our in-depth guide to rental property tax deductions, which includes a free worksheet to make your calculations easier.
Bottom Line
Whether you are an established property owner or just getting into the rental property business, ensure you have the proper coverage by getting landlord insurance. Rental property insurance covers your building, protects you from risk, and provides supplemental income when the property is not rented. Obie is an online broker specializing in landlord insurance policies. In a matter of minutes, you can get a free online quote for your property.
