If you own your living space, you probably already have some form of homeowner’s insurance to protect your property from hazards like fire, theft and wind damage. However, if you rent out your space, you’ll need a special type of property insurance that covers circumstances in which renters are occupying your space. This insurance is usually referred to as rental property insurance or landlord insurance, and it functions in a very similar way to homeowners insurance.
Take a look at a few reputable providers for rental property insurance.
The Best Rental Property Insurance
- Best for Rental Properties and Landlords: Honeycomb Insurance
- Best for Multiple Property Owners: Steadily Landlord Insurance
- Best for Members of the Armed Forces: USAA Rental Property Insurance
- Best for In-Person Assistance: Progressive Insurance for Rental Property
- Best for Customization: State Farm Rental Property Insurance
- Best for Diverse Portfolios: Obie Insurance
Best for Rental Properties and Landlords: Honeycomb Insurance
Honeycomb Insurance bills itself as revolutionizing the real estate insurance space with cutting-edge technology. The platform offers competitive pricing to those who own or manage rental properties or large developments, condo associations and/or single and multi-family units.
With AI, Honeycomb Insurance makes it easy to customize a policy that meets your needs, simplifying the process by:
- Offering top notch customer service
- Providing insurance coverage with no paperwork
- Completing site inspections with satellite images and computer technology
- Expediting the binding of coverage
With transparent pricing and processes, you can complete your application online, receive assistance from licensed agents and create a payment plan that makes the most sense for your property or community. While Honeycomb is only available in OH, MI, IL, WI, TX, CA, AZ, PA, GA, NJ, UT & MA, it’s an excellent resource for those who can partake.
- It’s easier to get covered in a hurry, which is often important for those who are purchasing properties or have tenants move out unexpectedly
- The platform can customize your coverage much faster than most and offer coverages that you might not realize you need
- Limited availability nationwide could be an issue for many property owners
AM Best Rating: A-
Best for Multiple Property Owners: Steadily Landlord Insurance
Though you’ll typically be able to find rental property insurance from most major insurance providers, these companies may only cover single-family spaces. Steadily Landlord Insurance specializes in landlord insurance and insures a variety of building types. This means that if you own a condo, duplex, multifamily apartment building or manufactured home, you can get coverage through Steadily.
Steadily is available in all 50 states, so you can get covered no matter where you are. The company also covers vacant and properties in the process of being flipped. If you don’t own a single-family unit, Steadily Landlord Insurance can be a comprehensive choice.
- Company specializes in landlord insurance
- Streamlined, simple application process
- Shorter financial history than some competitors
AM Best rating: N/A
Best for Members of the Armed Forces: USAA Rental Property Insurance
USAA is a unique rental property insurance provider exclusively for men and women who have served and their select family members. USAA offers coverage that include protections for both long-term rentals and home-sharing programs. It also covers loss of income, and you have the option to add an umbrella policy as well.
In addition to comprehensive coverage options for rental properties, USAA also offers discounts on other services that can help you maintain your property. If you also insure your home through USAA, you can save 10% on your rental property insurance. You can also claim a 25% discount on tenant screenings to find the best tenants for your space.
- Coverage available for up to 10 rental properties
- Includes extra discounts with coverage
- Policies not available to everyone
AM Best rating: A++
Best for In-Person Assistance: Progressive Insurance for Rental Property
Though online-only applications can be great for convenience, you might prefer to have in-person assistance when learning more about your insurance options. Progressive Corp. (NYSE: PGR) agents are available around the country to provide you with personalized advice on your coverage options. An in-person meeting with a Progressive representative might be the ideal choice for you if you aren't sure exactly which coverages you need.
If you already have an insurance policy with Progressive, you can save on both policies by bundling your coverage together. As one of the largest insurance providers in the United States, chances are that Progressive has some type of coverage you can take advantage of to enjoy discounts.
- Offers assistance from in-person representatives across the country
- Wide selection of bundling discounts available
- More expensive than some smaller competitors
AM Best rating: A+
Best for Customization: State Farm Rental Property Insurance
Landlords who own multiple properties may need more specialized coverage. In this case, State Farm can be an excellent choice for landlord insurance. Its policies allow you to save when insuring multiple rented spaces, and the company offers insurance for multiple types of rental units as well.
State Farm’s custom coverage options allow you to add coverage for everything from identity theft to the cost of necessary repairs or upgrades to a residence resulting from changing municipal law. You can even add a life insurance contract or buy-sell agreement that can protect management companies with multiple partners. As one of the largest insurance companies in the country, State Farm can help you create a customizable policy that includes protection for everything in your portfolio.
- Includes coverage for expenses incurred moving a tenant back into your property after repairs
- Large range of unique customization options
- Cannot apply for a policy online
AM Best rating: A++
Best for Diverse Portfolios: Obie Insurance
Obie Insurance is perfect for diverse portfolios because you can get a quote in just 2 minutes, save up to 25% and obtain coverage for:
- Single-family homes
- Multifamily housing
- Small, family-owned portfolios
- Large, institutional portfolios
With coverage available in all 50 states and quality customer service, you can protect your investments easily and get the support you need if you aren’t too familiar with insurance coverage or need to make changes.
- This platform works well for larger companies, which can be very helpful as larger firms often overpay for coverage
- You can add policies to your portfolio with relative ease, which helps smaller investors
- Pricing may not be optimal for your location
AM Best: N/A
Rental Property Insurance Cost
A variety of factors will play into the calculation of what you’ll pay for your landlord insurance policy. Some of the factors that your insurer will likely consider when calculating your rate include:
- Where your property is located
- The total value of the property you’re insuring
- Coverage limits
- Your experience as a landlord
- Your credit history
- Your claims history
- Any anti-theft devices you have installed on your rental property (for example, a security system)
According to the Insurance Information Institute, landlord insurance policies or policies that extend to rented properties usually cost about 25% more than homeowners insurance policies within the same area. This means that if you own a home located near your rental property, you can use your current rate to get an idea of how much you can expect to pay for your rental property insurance.
What Is Rental Property Insurance?
Rental property insurance, also known as a landlord policy, is property insurance that offers coverage for risks related to renting property to tenants. If you purchased a home using a mortgage to use as a rental property, your lender probably issued you a special mortgage. In the same way, your insurance company has to take your tenants into consideration when issuing your landlord insurance policy.
This type of insurance policy protects the owner of the home or the landlord by covering property liability or losses on properties that are rented out to tenants. This is not a renters insurance policy. Someone who needs additional coverage for themselves or for property damage as a tenant should purchase renters insurance.
What Does Landlord Insurance Cover?
Most landlord insurance policies generally cover the buildings on the property, certain personal property items, liability coverage and loss of income from the rental property. This type of insurance offers coverage for certain things that are not commonly offered in a regular homeowners insurance policy.
Take a look at the specific coverages that are usually found within a rental property insurance policy. Remember, they are similar to a homeowner policy, but they are not exactly the same.
This coverage offers protection for a rental property in the case of damage resulting from a fire, wind, lightning, hail or other losses that are covered. It protects the physical structure of the primary building on the property.
Personal Property Coverage
Personal property coverage on a rental property insurance policy only applies to your property that you keep on the rental property site in order to help maintain the property itself. For example, lawnmower is considered personal property that would be covered if it were damaged while on the rental property.
Personal items that you happen to leave on the property are not covered — even if they belong to you as the landlord — if they are not used to maintain the property. For example, if you’re making a repair and happen to leave your personal cell phone at a rental property that suffers damage from a fire, your landlord insurance policy would not cover your phone.
Loss of Use/Loss of Rental Income
This insurance provides coverage in the case your rental property becomes damaged by the tenant or by a natural disaster and is no longer able to be used as a source of income. For example, if the rental property is damaged during a storm and is no longer habitable, this insurance will cover the loss of income while the property is being repaired.
This insurance is part of landlord insurance, and it can help pay for any medical bills or legal expenses if someone is injured on your rental property. This coverage kicks in if you are found responsible for the injury that was sustained on your rental property. These coverages can handle loss of income, personal injury, medical costs and much more for an investment property.
Types of Rental Property Insurance Coverage
Different types of rental property insurance policies cover different types of properties, landlords and circumstances. Remember, these policies work for long-term and short-term rentals.
Landlord Insurance for Rental Property
Landlord insurance for rental property is an insurance policy for those who rent their property. This insurance policy can offer financial protection in the case of a natural disaster, coverage for water or fire damage, legal liability coverage and protection if a tenant is injured on the property. It operates in much the same way as homeowners insurance on a personal property that you live in full time. This type of insurance is best for landlords who are renting their residential property to tenants.
Umbrella Insurance for Rental Property
Umbrella insurance is a policy that offers coverage beyond what your renter’s insurance policy covers. It is a type of personal liability insurance that extends the limits of your personal liability insurance on your landlord insurance policy and will pick up the coverage when a lawsuit exceeds the limitations on your standard policy.
Commercial Rental Property Insurance
This insurance policy is similar to regular rental property insurance, but it is for when you are the landlord of a commercial property. Commercial properties have all the same risks as any other rental property, which means you should invest in a commercial insurance policy if you rent out a property to a business or another type of commercial entity.
Remember that flood insurance is not offered as part of a larger policy. You must purchase separate flood insurance to protect the property. Landlord insurance coverage, while robust, generally does not include damage caused by floods.
Finding the Insurance You Need
If you’re renting out a space without insurance, you could be putting both yourself and your tenants at risk. Start exploring insurance options with a recommended provider and be sure to get multiple quotes before you choose a policy. You have no idea whether you’re getting the best possible coverage until you know what’s out there.
Frequently Asked Questions
Do I need homeowners insurance for a rental property?
Yes. You’ll need a special type of homeowners insurance policy called a rental insurance policy to protect your investment.
Are rental property insurance payouts taxable?
No. Payouts on rental property insurance policies are not taxable. Some coverages (like loss of income) may be taxed at the same rate as your standard income.
Does landlord insurance cover flooding?
No. Landlord insurance covers leaks in the unit, but damage from “floodwaters” must be covered by separate flood insurance coverage.