Landlord insurance is specialized coverage for rental property owners gives financial protection against risks homeowners insurance won't cover: property damage, tenant liability claims and lost rental income when damage forces tenants out. With 19.3 million rental properties nationwide according to Congressional Research Service data, plenty of property owners need it. You can buy landlord insurance as a standalone policy or add rental coverage to your existing homeowners insurance, though rates and coverage options vary by state and insurer.
Landlord Insurance
Landlord insurance covers rental property damage, liability claims and lost rental income that standard homeowners insurance excludes.
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Updated: October 27, 2025
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Key Takeaways
Landlord insurance protects rental property owners from liability claims, property damage and lost rental income.
It covers property damage and liability claims, but doesn't cover tenant belongings or vacancy periods.
Your coverage needs depend on property value, net worth, location risk and tenant type.
What is Landlord Insurance?
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OTHER BUSINESS INSURANCE YOU'LL NEED
Landlord insurance covers your rental property and liability, but you'll need these for risks it won't handle:
- General Liability Insurance: Covers tenant and visitor injuries at your rental properties beyond dwelling coverage.
- Commercial Property Insurance: Protects multiple rental properties more comprehensively than a standard landlord policy.
- Business Income Insurance: Replaces lost rental income when covered damage forces you to close temporarily.
- Commercial Auto Insurance: Covers vehicles you use for property management tasks like maintenance and inspections.
- Workers' Compensation Insurance: Pays medical bills when property managers or maintenance workers get hurt working.
- Flood Insurance: Protects rental properties from flood damage that landlord policies don't cover.
Landlord Insurance: Policy Types
Landlord insurance comes in three main forms, each with different levels of protection for your rental property. These differences matter when you're choosing coverage that fits your situation and budget.
Coverage Level | Named perils only | All perils except exclusions | All risks except exclusions |
What's Covered | Fire, lightning, windstorm, hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft | Everything in DP-1 plus water damage from burst pipes, falling objects, weight of ice/snow | Covers most risks unless specifically excluded |
Cost | Lowest premium | Mid-range premium | Highest premium |
Property Eligibility | Basic rental properties, older buildings | Most single and multi-family rentals | Higher-value properties, newer construction |
Loss of Rent Coverage | Available with limits | Available with extended limits | Available with highest limits |
Deductible Options | Limited options, higher minimums | Standard options, flexible amounts | Full range of options, lowest minimums available |
Endorsement Availability | Few add-on options | Moderate add-on options | Extensive add-on and upgrade options |
Best For | Budget-conscious landlords | Balanced protection seekers | Maximum protection needs |
Note: Policy types and coverage options vary by state insurance regulations. Not all insurers offer every policy type in all states.
LANDLORD INSURANCE POLICY TYPES AND CLAIM PAYOUTS
Your policy type choice determines how your landlord insurance pays claims. DP-3 policies typically include replacement cost coverage, which means paying what it costs to rebuild or repair today. DP-1 and DP-2 policies usually use actual cash value, which factors in depreciation.
For example, if your rental property's 15-year-old roof gets damaged, replacement cost pays for a brand-new roof, but actual cash value only covers what that old roof was worth. This difference explains why DP-3 policies cost more upfront but provide better financial protection.
What Does Landlord Insurance Cover?
Your landlord insurance won't cover everything that happens at your rental property. Some situations get full protection while others leave you paying out of pocket. Let's look at real situations and whether you're covered:
Storm damage brings down a tree onto your rental building. | ✅ | During a severe storm, Maria's large oak tree crashed through her duplex roof, causing $28,000 in structural damage that her DP-2 policy covered completely. |
Flooding from a nearby river damages your rental property. | ❌ | When the nearby river flooded Tom's rental house with two feet of water, his standard landlord policy denied the $22,000 claim because he didn't carry separate flood insurance. |
Your tenant slips on icy steps and sues for medical expenses. | ✅ | After tenant Jennifer broke her ankle on Dave's icy rental steps, his landlord insurance liability coverage paid her $12,000 medical bill and $8,000 legal defense costs. |
Your tenant stops paying rent and abandons the property. | ❌ | When Sarah's tenant moved out without notice owing three months of rent ($4,200), her landlord policy provided no reimbursement because tenant default isn't a covered peril. |
Vandals break windows and spray-paint your rental unit. | ✅ | Local vandals caused $2,800 in damage, breaking windows and spray-painting Lisa's rental exterior, which her DP-3 policy covered under vandalism protection. |
Someone breaks into your tenant's apartment and steals their belongings. | ❌ | When burglars stole Mike's tenant's electronics and jewelry worth $6,500, his landlord policy didn't cover the loss because tenant belongings aren't his insured property. |
A burst pipe floods the rental unit and tenants can't live there for two months. | ✅ | James collected $3,200 in lost rental income from his insurer after a burst pipe flooded his unit, forcing tenants out during repair work. |
An earthquake damages your rental property's foundation. | ❌ | A moderate earthquake cracked Robert's rental foundation, requiring $18,000 in repairs that his standard policy excluded because it doesn't cover seismic damage. |
Your tenant's kitchen fire spreads and damages the building structure. | ✅ | When Amy's tenant's cooking fire spread to the kitchen walls and cabinets, her insurer paid $14,500 to restore the structural damage. |
Your property management company embezzles rent payments. | ❌ | After discovering his property manager had stolen $8,000 in rent payments over four months, Carlos learned his landlord policy doesn't cover management company theft. |
How Much Landlord Insurance Do I Need?
Every landlord needs enough coverage to protect their rental property investment and personal assets. If you rent out commercial space, you face even more liability risk, making the right landlord insurance policy limits crucial.
Your coverage needs depend on:
- 1Property Value
Your coverage should match what it costs to rebuild today, not what you paid for the property. Update your landlord insurance policy limits every year since construction costs keep climbing.
- 2Net Worth Protection
If you own more than your liability coverage protects, consider umbrella insurance. You want enough coverage to protect everything you've built.
- 3Property Type
Commercial rentals require business income coverage and higher liability limits because tenant businesses and their customers come and go.
- 4Location Risk
In disaster-prone areas, expect higher deductibles, and you might need extra coverage for things like floods or earthquakes.
- 5Tenant Requirements
Make your tenants carry renters insurance with at least $100,000 liability coverage and have them add you as additional insured.
Landlord Insurance Policy: Bottom Line
Landlord insurance is specifically for rental properties, covering risks that your regular homeowners insurance won't. You'll get protection for property damage and liability claims, but your tenants need their own renters insurance for their belongings. When shopping for coverage, focus on your property's value, your personal assets and the unique risks of your location and tenant type.
Commercial Landlord Insurance: FAQ
We tackled the most frequently asked questions property owners ask about landlord insurance when protecting their rental investments:
Do I need landlord insurance?
You don't legally have to buy landlord insurance, but it's essential for protecting your rental property investment. Your mortgage lender will likely require coverage, and without it, you're personally on the hook for property damage and tenant lawsuits that could cost thousands.
Are landlord insurance and homeowners insurance the same?
Homeowners insurance covers your primary residence and personal belongings, while landlord insurance protects rental properties but doesn't cover your tenant's stuff. Landlord insurance covers loss of rental income coverage and higher liability limits that regular homeowners policies don't offer.
How much does landlord insurance cost?
Your costs depend on property value, location and which coverage type you choose. DP-1 policies cost the least, while DP-3 policies run more but give you broader protection. Commercial properties need higher limits than residential rentals, so expect to pay more.
What is multi-property landlord insurance?
Multi-property coverage lets you insure several rental properties under one master policy, often saving you money through bulk discounts and making management easier.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.
sources
- Congressional Research Service. "Ownership of the U.S. Rental Housing Stock by Investor Type: In Brief." Accessed August 23, 2025.