Average Landlord Insurance Cost

What does a landlord insurance policy cover?

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Landlords spend a lot of time and money getting their rental properties up and running. Therefore, it is essential to have the proper insurance to protect this valuable investment. Learn what is included in a landlord insurance policy and how much on average, a policy costs.

Key Takeaways

  •  Landlord insurance protects you in the case your rental property becomes damaged.
  •  Expect to pay 15% to 20% more for landlord insurance than a standard homeowners insurance policy. 
  •  Landlord insurance can cover dwelling, personal property, and loss-of-use, among other things.

The Basics of Landlord Insurance

In general insurance policies offer two types of protection. The first part protects the physical structures on the property in case of a loss, while the second part offers liability protection in case of a slip and falls or other claims against your property. You will want your landlord policy to include:

  • Dwelling Coverage: This is coverage for the physical rental property. It is the cost to replace the existing structure. DP-3 is the best type of dwelling coverage you can get. It is the most expensive, but it includes coverage for “all risks” including vandalism and water damage. Claims are usually settled at replacement cost.
  • Other Structures: You should have coverage for any additional structures on the property, such as garages or sheds.
  • Personal Property: You want your policy to include coverage for any personal property you have at the rental, such as security cameras or equipment.
  • Loss of Use: This is coverage for any rental incomeyou could lose. You want to make sure you have a loss of use equal to whatever your gross rents are. If you collect $5,000 a month in rent, you want your loss of use policy to equal $60,000, which would be the yearly rent collected.
  • Medical Payments: This is coverage for any medical bills you may be responsible for.
  • Liability: Liability coverage protects you against an injury or lawsuit.
  • Separate Umbrella Policy: If you have a net worth that is more than the liability coverage on your property, you will want to take out an additional umbrella policy that sits behind the original policy to protect you for that additional amount.

Note

Renters are not covered under their landlord’s insurance policy. They need to purchase their own renter’s insurance policy to cover their possessions in the event of a loss. Average policies range from $10 to $20 a month.

Average Cost of Landlord's Insurance

According to Insurance.com, the average cost for homeowner’s insurance in 2022 was $2,305, with premiums varying significantly based on where you live, the size of your home, and the age of your house. In general, landlord’s insurance is 15% to 20% more expensive than a personal homeowner’s insurance policy. This will bring your expected rate for landlord’s insurance to around $2,650 or $2,766 per year.

Note

Rental properties come with a higher risk of damage and other incidents, so landlord insurance is usually more expensive than homeowners insurance.

Unfortunately, there is no average cost for landlord insurance. Costs will fluctuate wildly based on a significant number of factors. Costs will vary based on the state, county, city and even block your rental property is located on. The cost will also differ based on the type of rental property you own, these could include:

  • A condo
  • Single-Family home
  • Two-Family home
  • Multi-Family, three- to four-unit house
  • Apartment building: five or more rental units
  • Retail
  • Office
  • Industrial

Within these property types, you also have short-term rentals, seasonal rentals or full-time rentals. There is no average rental property, so there is no average landlord insurance cost.

You should, therefore, get insurance quotes from several different insurance carriers to determine the best rate and protection for your rental property. The most important point is making sure you have the right type and amount of insurance coverage.

The amount of your deductible will also impact your annual premium. Usually, the higher the deductible, the lower the annual premium.

Note

Prior insurance claims can also impact the amount you pay for a policy, usually increasing your premium.

A Sample Policy for a Two-Family Home in Portland, Oregon

The following is a sample landlord insurance policy for the year 2018, for a 3 family home in the state of New Jersey.

  • Dwelling Coverage: $655,000
  • Other Structures: Not Applicable
  • Personal Property: $5,000
  • Loss of Use: $50,000
  • Liability Coverage: $1,000,000
  • Medical Payments: $10,000
  • Annual Premium: $1905 for the year

Can Anything Help Reduce the Premium?

Maintaining your property, bundling your insurance policies with one provider, and choosing higher deductibles can all push down the cost of your landlord insurance premiums. Also check with your agent if discounts are offered for smart home safety monitors that can alert both you and your tenants of perils such as fire or flood.

What Is Excluded From Landlord's Insurance

It is just as important to understand what your policy excludes. The insurance company wants to be as specific as possible, because if it is vague, they may be on the hook for it. The policy will say what is covered and also what is excluded from coverage. Make sure you look at this list to understand what you are not protected from.

Frequently Asked Questions (FAQs)

What is the difference between homeowners insurance and landlord insurance?

Homeowners insurance covers your primary residence, while landlord insurance covers any rental properties that you own. Landlord insurance will usually include coverage for loss-of-use in the event that the building becomes uninhabitable.

Is it a legal requirement to have landlord insurance?

There is no legal obligation for you to acquire landlord insurance. However, if you have a mortgage on the property, your lender may require that you get a landlord’s insurance policy. This protects both their investment and yours.

Updated by
Carissa Rawson
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Carissa Rawson is a personal finance and credit cards expert who has been featured in numerous publications, including Forbes, Business Insider, and The Points Guy. Carissa earned a bachelor's from the American Military University and has an MBA from Norwich University, an M.S. from the University of Edinburgh, and is currently pursuing an MFA from National University.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. North Carolina Department of Insurance. "Dwelling Policies."

  2. GEICO. "Umbrella Insurance: How It Works & What It Covers."

  3. American Family Insurance. “How Much Is Renters Insurance?

  4. Insurance.com. "Average Homeowner's Insurance Rates by State 2022."

  5. East Insurance. "Landlord Insurance Cost: Details and Coverage."

  6. Nationwide. "What You Need To Know About Landlord Insurance."

  7. Travelers. "Landlord Insurance for Rental Properties."

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