How does landlord insurance work to protect your rental property?
Why you can trust The Zebra
The Zebra partners with some of the companies we write about. However, our content is written and reviewed by an independent team of editors and licensed insurance agents, and never influenced by our partnerships. Learn more about how we make money, review our editorial standards, reference our data methodology, or view a list of our partners.
When you rent property to a tenant — no matter if it's a house, apartment, or condo you're getting rental income from — you'll need to protect your investment in the same way you would your own home. Because rental properties are occupied by tenants who don't hold a financial stake in where they're living, these properties are generally more vulnerable to damage and disrepair than are homes occupied and cared for by their owners. In the eyes of insurance companies, this makes rental properties riskier to insure, and therefore more expensive than a homeowners insurance policy.
Rental property insurance — also known as landlord insurance or dwelling insurance — is meant to protect rental properties containing between one and four rental units not occupied by the owner. Rental property insurance shields landlords and property owners from potential financial losses caused by property damage and liability.
Tip: You may be allowed to deduct landlord insurance payments from your taxes
1. Short-term rentals
2. Long-term rentals
3. What does landlord insurance cover?
4. What does landlord insurance not cover?
5. What are the different types of landlord policies?
6. What's the difference between rental property insurance and homeowners insurance?
7. What's the difference between renters insurance and rental property insurance?
Depending on the duration for which your rental property is typically occupied, there's an important distinction to be made when it comes to acquiring insurance coverage.
If your rental property is occupied by short-term renters who come and go, your property would be considered a place of business use by insurers. If you find short-term tenants via a home-sharing service like Airbnb, which offers its own insurance, it might be a good idea to get additional coverage in the form of a commercial property insurance policy — one that specifically covers homeshares and vacation rentals, protecting landlords and owners. Although Airbnb's Host Protection insurance is automatically included in every booking and covers up to $1 million in property damage and liability insurance, it comes with limitations. Airbnb's rental property insurance does not cover damage or theft of your personal belongings in the rental, even if inflicted by guests or tenants, claims of personal injury (like slander or defamation), and property issues like bedbugs and mold. If you're not transparent about the home's rental use to your insurance company, you run the risk of having your policy voided or claims denied.
The case might be less complicated if you only occasionally rent out your property, or if it's a one-time short-term rental. Your existing homeowners policy may be sufficient, but you should confirm with your insurance company to avoid surprises. If it's not covered, consider adding an endorsement — specifically a rental rider — to your policy to ensure you're protected when you need to rent out your home.
If you have a long-term tenant living in your rental property (for a period of six months or longer), you'll need landlord or rental dwelling insurance. This will protect you from potential financial losses due to damage or destruction of your rental property. If the property is affected by a covered loss like a fire, your landlord insurance should cover the cost of repairs.
You should have the below types of coverage options available when choosing a landlord insurance policy. Depending on the policy and insurance company you select, these coverage options may differ along with their corresponding coverage limits.
Protection for the property is a given in a typical landlord insurance policy, with varying amounts of coverage and limits depending on the specific policy. See below specific options associated with property coverage.
If the structure of your home is compromised or damaged by a covered loss such as fire, wind, or lightning, this coverage helps pay to repair your rental property.
This coverage kicks in to cover detached structures on your property — like a fence or a garage.
If the rental is unlivable following a covered loss, this coverage — also known as loss of rental income — helps compensate for the rental income you're not receiving while it's being repaired.
If you leave any personal property, like appliances, for use by the tenant in the rental property, this optional coverage will help pay for the damage your home contents sustain under a covered loss. Note that this does not cover the tenant's belongings in any way, and only protects the owner or landlord's personal items. Renters should use their own renters insurance to cover their personal property.
If someone suffers an injury on your rental property, your liability coverage helps pay for the injured party's medical expenses and your legal fees if you're sued.
You should always read your policy line by line and understand the exclusions. Rental property insurance is unique from homeowners and renters insurance and has some exclusions you should keep in mind when trying to understand your policy.
Landlord insurance only protects the landlord's property and assets. It does not apply to any of the tenant's personal property or belongings — even if some of their belongings are damaged in the event the rental suffers a covered loss — so tenants will need to purchase renters insurance to account for their own items.
The property you're renting should be non-owner-occupied — meaning you cannot live on the same property you're renting out to tenants, even if they live in another unit, room, or floor. In this case, you would not be eligible for a landlord policy, and you'd need to bolster your own homeowners policy to cover the area of the property you're renting out.
If appliances in your rental property break down due to wear-and-tear, it won't be covered and the repair or replacement will have to be paid for out-of-pocket. Unless your home contents are specifically insured in your policy and become damaged from a covered loss, a landlord policy is not applicable to the loss.
Landlord policies are a type of dwelling insurance so it abides by the same tiers of coverage that define what perils (causes of loss) it protects against — DP-1 (basic), DP-2 (broad), and DP-3 (special).
A DP-1 policy is the most basic tier of coverage, protecting your dwelling, other structures, and personal property at actual cash value — which deducts for depreciation. Also referred to as a named peril policy, a DP-1 policy only pays out claims if you suffer a loss that's specifically named or specified in your policy.
Property Covered Against
Contents Covered Against
DP 1 - Basic Form
For an additional premium, DP-1 coverage can be extended to cover the following perils:
The next tier of coverage, a DP-2 policy, is slightly more robust than a DP-1. Similarly, it protects against named perils and pays out claims for your dwelling and other structures at replacement cost, while personal property is covered on an actual cash value basis.
Property Covered Against
Contents Covered Against
DP 2 - Broad Form
A DP-2 policy covers all of the named perils of a DP-1, including the ones that can be added at an additional cost, and adds the following perils:
Also known as an open peril policy, a DP-3 policy protects against all perils except those specifically listed in the policy. It offers the most comprehensive level of coverage for your dwelling and other structures and pays out based on replacement cost. However, your personal property is still only covered for the same named perils of a DP-2 policy and is reimbursed on an actual cash value basis.
Property Covered Against
Contents Covered Against
DP 3 - Special Form
A homeowners insurance policy protects the insured party's primary residence, including the structure of the home and its contents, including personal property and belongings. A landlord or rental property insurance policy is meant to cover a non-owner-occupied dwelling and offers no protection for tenants. Depending on the policies, both landlord and homeowners offer liability coverage.
A renters insurance policy, also known as an HO-4 policy, provides coverage to the tenant to protect their personal property and does not apply to the dwelling they're renting. Rental property insurance covers only the structure of the rented dwelling and in some cases, the landlord's personal property, and is not applicable toward the renter or tenant. Depending on the policies, both can include liability protection.
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.
The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.