Landlord insurance (also sold as a dwelling fire policy) replaces standard homeowners insurance when a property is tenant-occupied. A standard homeowners policy is designed for owner-occupied homes and won't pay claims on a property rented to tenants. Landlord insurance covers the dwelling, liability and lost rental income, and typically costs about 25% more per year than a standard homeowners policy for the same property.
Homeowners Insurance for Rental Property
Updated: June 24, 2026
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Key Takeaways
Standard homeowners insurance doesn't cover a property rented to tenants, and most insurers will deny claims if they discover unreported rental activity.
Many mortgage lenders require landlord insurance (a DP-1, DP-2 or DP-3 policy) before approving a loan on a non-owner-occupied property.
Landlord insurance costs roughly 25% more than a standard homeowners policy for the same property because tenants increase the insurer's risk exposure for liability and property damage.
What Is Homeowners Insurance for Rental Property?
Why Standard Homeowners Insurance Doesn't Cover Rentals
Owner-occupied policies are priced and structured around the policyholder living in the home. Once tenants move in, the risk profile shifts, and most carriers require notification of any occupancy change.
Standard homeowners policies exclude tenant-related liability, meaning injuries on the property and third-party claims aren't covered once the owner moves out. Loss-of-rents coverage isn't included either, since owner-occupied homes don't generate rental income.
What Rental Property Insurance Covers
Landlord insurance covers dwelling damage, landlord liability, loss of rental income, other structures and optional personal property left at the rental. The coverage limit for the dwelling should match the property's full rebuild cost, not its market value.
Dwelling CoverageDwelling coverage pays to repair or rebuild the rental property's structure after covered perils like fire, windstorms or vandalism. The coverage limit should match the property's full rebuild cost, not its market value.
Landlord Liability CoverageLandlord liability covers legal costs and medical bills if a tenant or visitor is injured on the rental property. Standard landlord policies commonly start at $100,000 in liability, but landlords with multiple units typically should carry higher limits.
Loss of Rental IncomeLoss of rental income (also called fair rental value) reimburses you for rent payments you'd lose if the property becomes uninhabitable after a covered event. Many policies pay lost rent for up to 12 months while repairs are completed.
Other StructuresOther structures coverage extends to detached garages, storage sheds, fences and other buildings on the rental property. This coverage is usually set at approximately 10% of the dwelling limit automatically.
Optional Personal PropertyOptional personal property coverage protects landlord-owned appliances, furnishings and equipment inside the rental. Tenants' belongings aren't included and require a separate renters insurance policy.
What Rental Property Insurance Doesn't Cover
Landlord insurance doesn't cover tenant belongings, normal wear and tear, deferred maintenance, certain types of tenant negligence or flood and earthquake damage. Tenants need their own renters insurance policy to cover personal belongings.
Tenant BelongingsA landlord policy covers the building and landlord-owned property inside it, not tenants' furniture, electronics or clothing. Tenants need their own renters insurance policy to cover personal belongings.
- Normal Wear and Tear
Faded paint, worn carpeting and aging appliances are not covered under any insurance policy. These are expected costs of owning a rental property and fall under routine maintenance budgets.
- Maintenance Issues
A roof that leaks because damaged shingles were not replaced, or plumbing that fails from long-term corrosion, will not produce a covered claim. Insurers exclude damage tied to deferred maintenance or neglect.
- Tenant Negligence
Some tenant-caused damage (like a kitchen fire from unattended cooking) may be covered, but intentional damage or damage from illegal activity is excluded. The security deposit or a civil claim is the recourse for intentional tenant damage.
- Flooding and Earthquakes
Standard landlord policies exclude flood and earthquake damage. Landlords in flood zones need a separate flood insurance policy through the NFIP or a private insurer, and earthquake coverage requires its own endorsement or standalone policy.
Types of Rental Property Insurance Policies
Insurers sell three dwelling fire policy forms (DP-1, DP-2 and DP-3) for rental properties. DP-3 offers the broadest coverage and is the most common choice for landlords with long-term tenants.
DP-1 (Basic Form) | Actual cash value (ACV) | Named perils only (fire, lightning, limited list) | Vacant properties or low-value rentals where minimal coverage is acceptable |
DP-2 (Broad Form) | Actual cash value or replacement cost (varies by insurer) | Broader named perils (adds falling objects, weight of ice/snow, accidental water discharge) | Mid-range rental properties where the landlord wants broader protection at a moderate cost |
DP-3 (Special Form) | Replacement cost | Open perils (covers everything except what's specifically excluded) | Most occupied rental properties; the standard recommendation for landlords with long-term tenants |
How to Choose the Right Rental Property Insurance
Choosing the right landlord policy takes more than picking the cheapest quote. The steps below walk through how to get insurance for a rental property, from estimating rebuild costs to comparing DP-3 carriers.
- 1
Calculate Your Property's Rebuild Cost
Before settling on a dwelling coverage limit, get a rebuild estimate from your insurer or a local contractor. Underinsured properties can trigger a coinsurance clause, cutting your payout after a total loss.
- 2
Assess Your Liability Exposure
Unit count, shared amenities and tenant foot traffic all affect how much liability coverage you need. Properties with pools, staircases or high foot traffic warrant at least $300,000 in coverage. Multiple properties? An umbrella policy fills gaps a standard landlord policy won't.
- 3
Compare DP-1, DP-2 and DP-3 Options
Your property's risk level and budget determine which form fits. DP-3 premiums run higher, but open-perils coverage means you don't have to prove what caused the damage to collect.
- 4
Add Loss-of-Income Coverage
Take your monthly rent and multiply it by a realistic repair timeline. A six-month rebuild can wipe out more in lost rent than the property deductible itself.
- 5
Get Quotes From at Least Three Insurers
Landlord policy pricing isn't consistent across carriers. Rate structures differ enough that pulling at least three quotes is the most reliable way to match coverage to cost.
Homeowners Insurance for Rental Property: Bottom Line
Standard homeowners insurance won't cover a property you rent to tenants. Landlord insurance (DP-1, DP-2 or DP-3) replaces the standard policy and covers the dwelling, liability and lost rental income. Compare landlord policy quotes from at least three insurers to find the right balance of coverage and cost.
Rental Property Insurance: FAQ
These FAQs explain how insurance works for rental properties, including coverage types, landlord policies and tenant responsibilities.
Standard homeowners insurance doesn't cover rental activity, so you need a landlord insurance policy (DP-1, DP-2 or DP-3) as soon as a tenant moves in. Most insurers will deny claims on a rented property if the policy still shows owner-occupied status. Contact your insurance company before listing the property to switch coverage.
Your insurer will likely cancel or non-renew your homeowners policy once it discovers the property is tenant-occupied. Renting changes the risk classification from owner-occupied to non-owner-occupied, which requires a separate landlord policy. Some insurers offer a conversion process that avoids a lapse in coverage.
Landlord insurance covers sudden, accidental damage caused by tenants (like an unattended stove fire) but excludes intentional destruction or damage from illegal activity. Your security deposit and lease terms are your first line of defense for intentional tenant damage.
File a claim with your landlord insurer, provide documentation of your lease terms and monthly rent amount, and the loss-of-rental-income portion of your policy reimburses you for the rent you would have collected while the property is uninhabitable after a covered loss. Many policies cap this benefit at 12 months.
Landlord insurance doesn't cover tenants' personal belongings, electronics or furniture. Tenants need their own renters insurance policy, and many landlords now require proof of renters insurance as a lease condition.
About Mark Fitzpatrick
Mark Fitzpatrick, a licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident insurance expert. He has spent nearly a decade analyzing the market, first at LendingTree and now at MoneyGeek, where he produces original research on hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
He covers economics and insurance at MoneyGeek, and his work has been featured in The Washington Post, The New York Times and NPR, among other outlets.
Like all MoneyGeek analysts, he draws on independent cost and consumer experience data. No insurance company partnership influences his recommendations.
Mark holds a B.A. from Boston College and an M.A. in Economics and International Relations from Johns Hopkins University. He started his career in financial risk management at State Street and is also a five-time “Jeopardy!” champion.