How Much Does Landlord Insurance Cost? The Factors That Set Your Premium
There's no honest single number. Here are the factors that drive landlord insurance premiums, the coverages to compare, and how to shop quotes like-for-like.
"How much does landlord insurance cost?" is one of the first questions new landlords ask, and one of the hardest to answer with a single number. Premiums vary enormously from one property to the next, even on the same street, because insurers price each policy on a long list of factors.
So instead of giving you a number that wouldn't apply to your property, this guide explains what drives the price, what coverage you're actually buying, and how to compare quotes so you get the right policy at a fair price.
General education only. Coverage terms and availability vary by insurer and state. Talk to a licensed insurance agent or broker about your property.
First: landlord insurance isn't homeowners insurance
A standard homeowners policy is generally written for an owner-occupied home. Once you rent a property out, you usually need a landlord policy (often called a dwelling fire policy, DP-1, DP-2 or DP-3, depending on the form). Using the wrong policy type can leave you without coverage when you need it, so tell your insurer the property is a rental.
Short-term rentals often need different coverage again. Ask about it specifically if you host on Airbnb or Vrbo. See short-term rental taxes: the basics for the tax side.
What a landlord policy typically covers
Exact terms vary, but the main parts usually are:
- Dwelling coverage: the structure itself, against covered perils such as fire or wind
- Other structures: detached garages, fences, sheds
- Liability: if someone is injured on the property and you're found responsible
- Loss of rental income (fair rental value): rent you lose while a covered loss makes the unit uninhabitable
- Landlord-owned contents: appliances, furniture in a furnished rental, maintenance equipment
What it generally doesn't cover:
- Your tenant's belongings. That's what renter's insurance is for. Many landlords require it in the lease.
- Normal wear and tear and maintenance issues
- Flood and earthquake, which usually need separate policies or endorsements
- Certain other exclusions listed in the policy
The factors that set your premium
1. Location
Where the property is drives much of the price: local weather and catastrophe risk (wind, hail, wildfire, hurricanes), crime rates, distance to a fire station and hydrant, and local construction costs. State insurance markets also differ.
2. Dwelling coverage amount
Insurers price on the cost to rebuild the structure, which can be quite different from market value or purchase price. Higher rebuild cost means higher premium. Make sure the coverage amount is realistic.
3. Policy form and valuation
- Named-perils vs. open-perils forms (broader coverage usually costs more)
- Replacement cost vs. actual cash value: replacement cost pays to rebuild without depreciation and generally costs more. Actual cash value subtracts depreciation.
4. Property age and condition
Older roofs, electrical, plumbing and heating systems raise risk. Some insurers adjust price or eligibility based on roof age and material, wiring type or plumbing. Updates can help.
5. Construction type
Brick or masonry vs. frame construction, roof type and other features affect price.
6. Number of units
A duplex or fourplex is priced differently from a single-family home.
7. Liability limits
Higher liability limits cost more. Many landlords also add an umbrella policy for extra liability protection above their underlying policies.
8. Deductible
A higher deductible usually lowers the premium, but you pay more out of pocket when there's a claim. Choose a deductible your reserves can comfortably cover. See how much CapEx reserve per unit.
9. Claims history
Prior claims on the property, or by you, can raise premiums.
10. Occupancy and use
- Vacancy: many policies restrict coverage if the property is vacant for an extended period. Check the vacancy clause.
- Short-term vs. long-term rental
- Furnished vs. unfurnished
11. Safety and protective features
Smoke and CO detectors, monitored alarms, deadbolts, fire extinguishers, updated systems and water-leak sensors can earn discounts with some insurers.
12. Optional endorsements
Flood, earthquake, sewer backup, equipment breakdown, ordinance or law coverage and others add cost and protection.
13. Your insurer and bundling
Insurers price differently. Some offer discounts for multiple properties or bundled policies.
How to compare quotes fairly
Quotes are only comparable when the coverage is the same. For each quote, line up:
- [ ] Policy form (DP-1/DP-2/DP-3 or equivalent)
- [ ] Dwelling coverage amount, and replacement cost vs. actual cash value
- [ ] Other structures and landlord contents limits
- [ ] Liability limit
- [ ] Loss of rental income: limit and time period
- [ ] Deductible(s), including any separate wind/hail deductible
- [ ] Vacancy clause
- [ ] Endorsements included (sewer backup, ordinance or law and so on)
- [ ] Exclusions you need to cover separately (flood, earthquake)
A cheaper quote with half the liability limit or no loss-of-rent coverage isn't really cheaper.
Questions to ask your agent or insurer
Bring this list when you request quotes:
- Is this policy written for a non-owner-occupied rental, and which form is it?
- Is the dwelling covered at replacement cost or actual cash value? How did you estimate the rebuild cost?
- What liability limit do you recommend for my situation, and is an umbrella policy available?
- How long does loss of rental income coverage last, and how is it calculated?
- What does the policy say about vacancy between tenants or during a renovation?
- Is sewer or drain backup covered, or is it an add-on?
- Do I need separate flood or earthquake coverage here?
- Are there discounts for safety features, updated systems, multiple properties or a claims-free history?
- Does anything change if I furnish the unit or rent it short-term?
- How are claims handled, and how quickly are they typically paid?
Write the answers down next to each quote. It makes the comparison much clearer, and gives you a record of what you were told.
Ways to manage the cost (without under-insuring)
- Shop around with several insurers, or use an independent agent who can quote multiple carriers.
- Raise the deductible if your reserves can absorb it.
- Update old systems: roof, electrical, plumbing.
- Add safety features that qualify for discounts.
- Bundle multiple properties or policies where it makes sense.
- Review annually. Rebuild costs and your portfolio change.
- Require renter's insurance in your lease, so tenant-caused losses to tenant belongings don't become disputes with you.
Track it in your books
Insurance premiums are generally a deductible rental expense (Schedule E's insurance line) when the policy covers the rental. Ask your tax pro about prepaid multi-year premiums. Track premiums by property in the free Single-Property Tracker or the Rental Bookkeeping Workbook ($27). When analyzing a purchase, plug a real insurance quote into the Rental Deal Analyzer ($19) or the free cash-on-cash return calculator. Guessing at insurance is one of the easiest ways to overestimate cash flow.
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This article is for general educational purposes and is not insurance, legal or tax advice. Coverage, pricing factors and availability vary by insurer and state; consult a licensed insurance professional. — Jon, Everyone's Landlord