Landlord insurance protects the building and your liability when you rent out a property, but it does not cover a tenant's belongings or loss of rent
Landlord insurance (also called rental property insurance or landlord's insurance) is designed for properties you own but do not live in. It covers the structure itself, your liability if someone is injured on the property, and additional costs like legal fees if you need to evict a tenant. A standard homeowners policy will not cover a rental property — most insurers will cancel it if they discover you are renting out the house.
The main difference between landlord insurance and homeowners insurance is that landlord policies assume the building is occupied by tenants, not by you. They do not cover the tenant's personal belongings (that is the tenant's responsibility through renters insurance), and they typically do not cover loss of rent if the property becomes uninhabitable. Some landlord policies do offer rent coverage as an add-on, but you pay extra for it and it has limits.
You need landlord insurance before you sign a lease with a tenant. Most mortgage lenders require it as a condition of the loan, and without it you are personally liable for injuries, damage claims, and legal costs that could exceed the property's value.
Key Takeaways
- Landlord insurance covers the building structure, your liability for injuries on the property, and legal costs, but not the tenant's belongings or lost rent.
- A homeowners policy will not cover a rental property and most insurers will cancel it if they learn you are renting; you must switch to a landlord policy.
- Most mortgage lenders require landlord insurance as a condition of the loan and will not fund the property without proof of coverage.
- Rent loss coverage is available as an add-on but costs more and typically covers only a portion of your monthly rent for a limited time.
- Landlord policies vary widely in what they cover and what they exclude, so comparing quotes from multiple insurers is necessary to find the right fit.
What a standard landlord policy covers
A basic landlord insurance policy covers the building structure — walls, roof, flooring, built-in appliances, and fixtures. It also covers permanent structures on the property like a detached garage, deck, or shed. If a fire, storm, or vandalism damages the house, your insurer pays to repair or rebuild it (up to your coverage limit).
Liability coverage is the second major piece. If a tenant, their guest, or a delivery person is injured on the property and sues you, liability coverage pays their medical bills, lost wages, and legal judgments — up to your policy limit. It also covers damage the tenant claims you caused, such as if a pipe you failed to maintain burst and damaged their belongings (though the tenant's items themselves are not covered).
Most landlord policies also include coverage for loss of use, which pays a portion of your rent if the property becomes uninhabitable due to a covered event like a fire. This is different from rent loss coverage (described below) — loss of use assumes you cannot rent the property at all, whereas rent loss covers the rent you lose if a tenant breaks the lease or stops paying.
What landlord insurance does not cover
Landlord insurance does not cover the tenant's personal property — their furniture, electronics, clothing, or other belongings. That is the tenant's responsibility. If a fire destroys the house and the tenant's couch, your insurance pays to rebuild the house but not to replace the couch. The tenant should carry renters insurance to protect their own items.
Standard landlord policies also do not cover loss of rent — the money you would have collected if the tenant had not broken the lease, stopped paying, or moved out early. This is a major gap for many landlords. If a tenant stops paying rent and you spend three months in eviction court before they leave, your insurer will not reimburse you for those three months of lost income. You can add rent loss coverage to your policy, but it costs extra and usually covers only 30 to 50 percent of your monthly rent for a limited period (often 6 to 12 months).
Landlord policies also exclude damage caused by wear and tear, lack of maintenance, or intentional acts by you or the tenant. If you neglected to fix a leaking roof and water damage spreads, the insurer may deny the claim. Similarly, if a tenant deliberately punches a hole in the wall, that damage is typically not covered under the liability section (though you may be able to recover it through the security deposit or a separate claim).
Rent loss coverage and when to add it
Rent loss coverage (sometimes called loss of rents or rental income coverage) reimburses you for rent you lose when the property cannot be rented due to a covered event. If a fire makes the house uninhabitable and it takes four months to rebuild, rent loss coverage pays a portion of your monthly rent for those four months. The coverage limit is usually 30 to 50 percent of your monthly rent, and the maximum payout period is often 6 to 12 months.
Rent loss coverage does not cover rent you lose because a tenant stops paying or breaks the lease — only rent you lose because the property itself is damaged and uninhabitable. It also does not cover rent loss from events you excluded on your policy (such as flood or earthquake, which require separate policies).
Whether to add rent loss coverage depends on your financial situation and your mortgage terms. If you have savings to cover several months without rental income, you may not need it. If your mortgage payment depends entirely on the rent you collect, adding rent loss coverage is worth the extra cost. Check your mortgage documents — some lenders require it.
How landlord insurance differs by property type
A single-family rental home is the most straightforward to insure. Your policy covers the structure and your liability, and the cost is usually lower than for a multi-unit building because the risk is simpler.
A duplex, triplex, or small multi-unit building requires a different type of policy. These are often called landlord policies for multi-unit properties or commercial policies, depending on the number of units. The premium is higher because you have more tenants, more potential liability, and more complex coverage needs. Some insurers will not cover properties with more than four units under a standard landlord policy and will require you to get a commercial property policy instead.
If you rent out a room in a house where you also live, you may be able to stay on a homeowners policy with a rider (an add-on) for the rental income. This is cheaper than switching to a full landlord policy, but it only works if you occupy the property as your primary residence. Ask your insurer whether this option is available.
What affects your landlord insurance cost
Your premium depends on the property's location, age, construction type, and replacement cost. A newer brick house in a low-crime area costs less to insure than an older wood-frame house in a high-crime area. The insurer also considers the number of units, whether you have a mortgage on the property, and your claims history.
The coverage limits you choose also affect the cost. A higher limit (meaning the insurer will pay more if something goes wrong) costs more in premium. Most insurers recommend a limit equal to the replacement cost of the building — what it would cost to rebuild from scratch, not the market value of the property.
Some insurers offer discounts for bundling multiple policies (such as landlord insurance and an umbrella policy), for installing security systems or smoke detectors, or for having no claims in the past three to five years. Ask each insurer what discounts they offer.
How to compare landlord insurance quotes
Get quotes from at least three insurers. Provide the same information to each one: the property address, year built, square footage, number of units, construction type (wood frame, brick, etc.), and the replacement cost estimate. Ask each insurer for a quote on the same coverage limits so you can compare apples to apples.
When you receive quotes, check what is included in the base policy and what costs extra. One insurer's quote might include loss of use but not rent loss coverage, while another includes both. Read the exclusions carefully — some policies exclude certain types of damage or have higher deductibles for specific events.
Do not choose based on price alone. A cheaper policy may have a higher deductible, lower coverage limits, or more exclusions. Check the insurer's financial rating (available through A.M. Best or J.D. Power) to make sure they can pay claims if something happens. Also read recent customer reviews to see whether the insurer pays claims promptly or disputes them frequently.
Frequently Asked Questions
Can I use my homeowners insurance for a rental property?
No. Homeowners policies are designed for owner-occupied homes and do not cover rental properties. If you tell your insurer you are renting out the house, they will likely cancel your policy. You must switch to a landlord policy before you sign a lease with a tenant.
Does landlord insurance cover damage the tenant causes?
It depends on the type of damage. If a tenant accidentally breaks a window or damages the structure through normal use, that is typically the tenant's responsibility and should be deducted from their security deposit. If a tenant causes damage that results in a liability claim (such as a guest is injured because of the damage), your liability coverage may apply. Intentional damage by the tenant is usually not covered.
What if my property is damaged and I cannot rent it for several months?
If you have loss of use coverage, your insurer will pay a portion of your rent for the time the property is uninhabitable. If you do not have this coverage, you will not be reimbursed. This is why adding loss of use or rent loss coverage is important if your mortgage depends on rental income.
Do I need landlord insurance if I own the property outright with no mortgage?
You are not legally required to carry insurance if you own the property free and clear, but it is strongly recommended. Without insurance, you are personally liable for injuries on the property and for damage claims. A single lawsuit could cost more than the property is worth. Most landlords carry insurance regardless of whether they have a mortgage.
What is the difference between landlord insurance and umbrella insurance?
Landlord insurance covers the building and liability up to a specific limit (usually $100,000 to $300,000 for liability). Umbrella insurance is a separate policy that covers liability claims that exceed your landlord policy's limit. If a tenant is severely injured and sues for $500,000, your landlord policy pays up to its limit, and umbrella insurance covers the rest. Umbrella insurance is optional but recommended if you own multiple properties or have significant assets.