What is Landlord Insurance, and Do I Need It?

For real estate investors, risk is part of the job.

But why take more risk than you need to?

If you rent properties, one of the best ways you can protect your business is by purchasing landlord insurance. Insurance protects you legally and financially in case of an accident, natural disaster, or liability.

Landlord insurance also protects you from the unpredictability of renters, who may introduce risks into your rental business that you can’t foresee or control.

So, what does landlord insurance cover? How much will it cost? Will it protect your renters as well?

Here’s what you should know about landlord insurance.

What is Landlord Insurance?

Landlord insurance policies protect you and your rental business against potential losses. A loss could be an accident, a natural disaster, or a legal liability.

Ideally, you’ll purchase insurance before you put your property in service. To do this you will contact an insurance provider, who will ask you which dwelling policy (DP) you’d like to purchase. Dwelling policies are plans with varying level of coverage offered by the insurance company. For instance, a basic dwelling policy might cover fires and storm damage.Visit here for informative about Door Lock

What Does a Dwelling Policy Cover?

The specific losses covered by your dwelling policy depends on the insurance company. In general, landlord insurance covers:

  • Property damage to your building or other equipment. For instance, property damage may result from a fire, lightning storm, windstorm, tornado, or criminal break-in.
  • Lost rent from your tenants when your properties are uninhabitable due to damages.
  • Liabilities or legal claims made against you, including legal fees, court costs, or medical bills.

A standard dwelling policy covers each of the above losses. However, most insurance companies offer additional coverage available for add-on pricing. For instance, you may be able to purchase coverage for vandalism, damage during construction, flooding, or evictions. 

Think about the geographical location of your properties when deciding which dwelling policy to buy. For instance, if your area receives a lot of rain and is high risk for flooding, it makes sense to buy a policy that covers flood losses. 

How Much Does Landlord Insurance Cost?

The cost of landlord insurance depends on the dwelling policy and add-on policies you choose. However, the average cost across the U.S. is $1,200-$1,300 per year, paid in monthly installments. 

Landlord insurance is significantly more expensive than a typical homeowner’s policy. This is because renters tend to introduce more risk and liabilities. However, your total insurance costs will ultimately depend on factors including:

  • The age of the building
  • The dwelling policy you choose
  • Your property’s location
  • The materials used to construct the building
  • Whether you allow pets

Before making a final decision, ask for a quote for landlord insurance. This will help you get the most information before making a final decision.

Benefits of Landlord Insurance

Why should you purchase landlord insurance? There are several compelling reasons:

  1. Insurance protects your investment should the unthinkable happen. It’s best to be prepared.
  2. Insurance makes you an attractive mortgage candidate. If you’re looking to refinance in the future, having landlord insurance makes you a more attractive candidate. Many lenders require insurance.
  3. Insurance is tax deductible. Your premiums are usually fully deductible in one year as operating expenses.

What About Your Tenants?

Do your tenants also need insurance? 

Requiring renter’s insurance is a good policy to integrate into your rental agreements. This is because landlord insurance does not cover tenant belongings, which may be damaged in a fire, storm, or accident.

Renter’s insurance policies can be purchased separately by each of your residents. How much renters insurance do your tenants need? That depends on your tenants’ preferences. A tenant who plans to store valuables in their units, such as jewelry, may want more coverage than a basic policy offers. A good practice is to recommend a specific policy to your renters when they sign their lease or require certain minimum coverages. 

The cost for renters insurance is relatively affordable, at around $15 a month. Of course, this will depend on the policy you select and whether your renters purchase any add-on policies.


Purchasing landlord insurance is one of the most basic ways you can protect your investments. You’ve worked hard to build your rental business—you should want to safeguard it for the future. Now that you understand the costs and coverage options, purchase the policy that makes the most sense for your properties.

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