While it is super fun making money from a rental property, understanding how to protect it is essential.

But here's the thing:

Most people don't know that as a landlord, a homeowners insurance policy nor a rental insurance policy will protect your property from a loss.

This is where rental property insurance comes in.

landlord insurance

In this post today, I will help you understand what landlord insurance is as well as how it works and when you need it.

In This Article

What Is Landlord Insurance?

Landlord insurance works almost like homeowners insurance in that it covers you against damage to your building and protects you against liability issues if someone gets injured on your property.

It is often called buy to let home insurance and also provides a layer of extra protection because it treats your rental properties as a business. 

What Does Landlord Insurance Cover?

Your landlord insurance policy will cover the building and property, but expand on liability coverage to make sure you don't have to deal with legal fees.

There is also income loss protection if you are unable to rent out a room or building if it becomes uninhabitable for a certain amount of time.

A great landlord insurance policy should have three core and comprehensive protections:

Property Damage

Coverage for property damage will cover the property if the real estate or furniture is damaged from: 

  • fire
  • vandalism
  • earthquake
  • natural disaster
  • irresponsible tenants
  • electric / gas malfunction

I recommend going for a policy that offers replacement cost or replacement value coverage instead of actual cash value coverage. 

We created a post about actual cash value vs replacement cost coverage if you want to learn more about the differences.

Lost Rental Income or Rental Default Insurance:

If your property is put in a position to be uninhabitable from things like:

  • a sink hole
  • mold
  • termites
  • rat infestation
  • irresponsible tenants
  • electric / gas malfunction

Your rental default insurance would cover the rent money that you would be missing out on if a renter was currently occupying the property.

Liability Protection: 

The liability protection works like it does with homeowners insurance, it covers the medical or legal costs that might come if a tenant or visitor suffers an injury due to a property maintenance issue such as:

  • icy walkways
  • architectural collapse
  • out-of-control hive of wasps

How Much Does Landlord Insurance Cost?

On average, landlord insurance costs around 25% more than a comparable homeowners insurance policy according to the Insurance Information Institute. 

However, the additional cost is definitely worth paying to have the extra coverage. 

There are several factors that will determine what your rental property insurance will cost and they are very similar to what determines the cost of homeowners and renters insurance policies

These factors are: 

  • The location
  • If there is a swimming pool or not
  • The size of the building and the number of rental units
  • The age and condition of the property, (Like, is wiring up to code?)
  • Security features installed, such as fire sprinklers, gates, alarms, etc
  • the specific policy you purchase and The Size of The policy

One of the best features about landlord insurance is that it can be written off as a business expense on your taxes.  

It is one of the few ways that homeowners insurance is tax deductible

After speaking with the guys at Buttonwood property management along with recommending landlord insurance they also advise landlords to offset capital expenses or to improve their property, utilities,  property losses.  

rental property insurance

Homeowners Insurance Vs Landlord Insurance

Homeowners insurance policies cover a lot of things – damage to your personal property, theft, liability, loss of use, and more.

Homeowners insurance covers damage to the structure of your home as well as surrounding structures; however, while homeowners insurance covers your home, it won’t cover a residence you rent out. 

And here's the thing:

Personal liability coverage won’t extend to business activities, and neither will personal umbrella policies.

This means that if your tenant is hurt while renting at your property a basic homeowners policy will not cover you for that. 

Homeowners Insurance

  • Covers Mortgage Payments For Loss Of Use
  • Covers You If Guest Is Hurt At Your Home
  • Covers Dwelling & Personal Property
  • Protects Your Home & All Things Inside

Landlord Insurance

  • Cover You For Lost Rental Payments
  • Cover You If Tenant Is Hurt On Property
  • Covers Only The Dwelling / Liability
  • Doesn't Protect Renters Personal Property

Simply Insurance is the simplest & fastest way to compare landlord insurance online.

"Simply Insurance... focuses on consumer-facing insurance products and instant online insurance quotes"

- USA Weekly

Landlord Insurance Vs Renters Insurance

Landlord insurance actually has more in common with home insurance because it covers the actual building.

However, renters insurance is still an important part of coverage. 

Most people assume that their landlords policy covers them; however, that couldn't be further from the truth.

Landlord insurance doesn't cover your tenants personal property in the event of a covered loss.

And even though renters insurance isn't legally required in most states, a landlord can require you to have coverage before they will rent to you.

Imagine a property burning down, you lose your home and your renter loses all of their possessions.

Your landlord insurance policy will cover the cost of their rent and start rebuilding your property but they will be left without anything.  

To avoid this headache it is best to make sure your renters have a renters policy, it will protect you both in the end.

Renters Insurance

  • Covers Relocating For Loss Of Use
  • Covers You If Guest Is Hurt At Your Home
  • Covers Only Personal Property & Liability

Landlord Insurance

  • Cover You For Lost Rental Payments
  • Cover You If Tenant Is Hurt On Property
  • Covers Only The Dwelling / Liability
  • Doesn't Protect Tenants Personal Property

Who Has The Best Rental Property Insurance?

We have found the best landlord insurance to come from Hippo, you can check out or quick review below.

hippo insurance logo

About Hippo Home Insurance

Hippo is the newest entrant into the home insurance world but is backed by TOPA Insurance company.

As of today TOPA has an A- (Excellent) rating with A. M. Best.

Hippo believes that great homeowners insurance should be affordable, smart, convenient, and fast.

Hippo wants to make sure that you are able to get a homeowners insurance policy that covers you for the most relevant things today.

Product Features

  • Coverage For Your Home Office
  • Available In: AL, AZ, CA, IL, IN, MD, MN, MO, MS, NM, NV, OH, PA, TN, TX, WI  
  • Free Water leak Sensor For Home
  • Condo Insurance Available
  • Quotes In 60 Seconds
  • Mortgage Payment Protection
  • A Simple, 100% Online Application & E Signature Process

A Free (Roost Water Leak Sensor) With Every Policy

With every policy Hippo offers a free Roost water leak sensor that has a value of $50.00. According to Roost, you can outsmart water with their smart water leak and freeze detector. The way it works is that you place it anywhere the potential for flooding or leaking exists and if it senses water it will send an alert to your smart phone.

Simply Insurance Thinks

Hippo has come out of the gates swinging at its competitors with on average 25% lower premiums.  They also have a much faster application and approval process which doesn't require an agent to complete.  Hippo is the best answer if you need fast quotes and fast coverage.

Want to learn more?  Check out our full Hippo Insurance Review.

What's Not Covered By Landlord Insurance?

The list goes on for all the reasons you need to own a landlord insurance policy if you rent homes as a business.

However, there are some things that the policy does not cover and these things are:

Maintenance And Equipment Breakdowns

If the furnace or dishwasher in your rental property breaks down, you'll likely have to pay out of pocket for any necessary repairs or replacements.

Property You Share

According to the National Association of Insurance Commissioners (NAIC), landlord policies are designed for "non-owner-occupied" property.

This means that if you have someone renting in the basement of your home, a landlord insurance policy will not work for them.

You should check with your home insurance company and see if you can add coverage to your homeowners policy for the section of your property you're renting.

Tenants' Personal Property

Your tenants need to have their own separate renters insurance policy if they want to make sure their personal property is protected from a loss while renting at your property.

Landlord insurance will not cover their personal property nor will it cover their personal liability issues.

It is becoming standard for landlords to require renters insurance which probably will eventually become industry standard. 

Simply Insurance is the simplest & fastest way to buy rental property insurance online.

"Simply Insurance... focuses on consumer-facing insurance products and instant online insurance quotes"

- USA Weekly

Take Action

Hopefully you now understand what rental property insurance or landlord insurance is and how it works.

If you don't have coverage on your properties you are putting yourself at a huge risk and disadvantage.

And if your tenants don't have renters insurance you should definitely think about requiring it.

Don't waste any time, click the button above to get some quick quotes and immediate coverage.

Sa El

About the author

Sa El is the Co-Founder of Simply Insurance and a licensed Insurance Agent with over 11 years of experience in the industry.  He specializes in Life & Health Insurance and is certified in Long Term Care Insurance in the state of Georgia. He is also an Official Member of the Forbes Finance Council, a licensed real estate agent in the state of Georgia (License #382602), an entrepreneur, insurance educator, and freelance writer.

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