Landlord insurance is a crucial safeguard for those renting out their properties, providing a combination of property and liability coverage to protect against unexpected events. At Old Harbor Insurance, we specialize in tailoring these policies to meet the unique needs of each landlord, ensuring comprehensive protection. Our expertise spans over ten different personal insurance lines, allowing us to minimize your risk and secure your assets effectively.

Whether you own a single rental unit or multiple properties, understanding the scope of landlord insurance and how it can shield your investment is paramount. This article will guide you through what landlord insurance covers, helping you make informed decisions about your coverage needs.

What Is Landlord Insurance?

Landlord insurance, also known as rental property insurance, is a type of policy specifically designed for property owners who rent out their properties. This insurance protects against the financial risks associated with renting out real estate, including damages to the property, liability claims, and loss of rental income. 

What does landlord insurance cover?

Landlord insurance provides a comprehensive safety net for property owners, covering several critical areas that ensure financial security and peace of mind. Here are the core components and additional options available in a typical landlord insurance policy:

Property Damage

Landlord insurance covers physical damage to your rental property caused by various events. Commonly included perils are fire, natural disasters such as storms and hail, vandalism, and other forms of accidental damage. This coverage ensures that the structural integrity and value of your property are protected against unexpected incidents, helping to cover the costs of repairs or reconstruction necessary to restore the property to its previous condition.

Liability Protection

This aspect of landlord insurance protects you from financial loss if someone is injured on your property. If a tenant or visitor files a lawsuit for injuries incurred while on your premises, liability coverage will help pay for legal defense costs and any awarded damages. This protection extends to medical expenses arising from such incidents, safeguarding your assets from claims that could otherwise be financially devastating.

Loss of Income

If an insured event makes your property uninhabitable, loss of income coverage kicks in to compensate for the rental income you’ll miss out on during repairs. This part of your policy is essential for maintaining your cash flow when you cannot collect rent, ensuring that your financial obligations can still be met without disruption.

Rent Guarantee Insurance

This add-on provides compensation if a tenant stops paying rent. In the volatile landscape of property rental, this coverage offers landlords an extra layer of security, ensuring that you have a financial cushion if a tenant defaults on their rent, which can be particularly valuable in times of economic uncertainty.

Flood and Earthquake Insurance

Standard landlord policies typically exclude certain natural disasters, such as floods and earthquakes. Given the potential for significant damage from these events, purchasing separate policies to cover these risks is often wise. These policies are especially important if your property is in a high-risk area, providing specific protection that could save you from enormous out-of-pocket expenses.

Vandalism and Burglary

While basic landlord insurance includes coverage for vandalism, you can enhance your policy with optional riders that offer expanded coverage for deliberate damages and theft. These riders are particularly valuable if your property is located in an area prone to such incidents, protecting you from the financial implications of burglary and malicious damages.

Each coverage type addresses the unique risks landlords face, providing a tailored solution that helps manage and mitigate potential losses effectively. With these protections in place, landlords can feel more secure in their investments and better prepared for the uncertainties of renting out property.

What Landlord Insurance Does Not Cover

While landlord insurance provides extensive protection for property owners, there are specific areas and items that are not covered under a standard policy. Understanding these exclusions is crucial for landlords to avoid unexpected financial burdens. Here are the key exclusions typically found in landlord insurance policies:

Tenant’s Personal Property and Belongings

Landlord insurance does not cover tenants’ personal belongings. In the event of damage or loss, tenants must rely on their own renters’ insurance to protect items like furniture, electronics, and personal effects. This separation ensures that the landlord’s coverage focuses on the property and associated risks, not the possessions within it that belong to tenants.

Maintenance and Wear and Tear

Landlord insurance does not cover routine maintenance and the natural wear and tear that occurs over time. This includes things like aging appliances breaking down, faded paint, or worn-out carpeting. Landlords are expected to budget for and manage these ongoing maintenance tasks as part of the regular upkeep of the property. Insurance is designed to step in for sudden and accidental damage, not for ongoing maintenance issues.

Shared Property and Owner-Occupied Units

If a landlord lives in the same property as their tenants, such as renting out a room or a separate unit in a multi-family home, standard landlord insurance may not apply. These situations often require a different type of insurance policy, as the risk profile changes when the owner occupies the same building. For these cases, a more appropriate coverage might be a policy that blends elements of homeowners and landlord insurance, ensuring that all aspects of the property and liability risks are adequately covered.

In each of these scenarios, landlords should consult with their insurance providers to understand the specific limitations of their policies and consider additional coverages that might be necessary to fully protect their investments and interests.

Cost of Landlord Insurance

The cost of landlord insurance can vary widely based on several factors, making it essential for property owners to understand these variables to better anticipate their insurance expenses.

Factors Influencing the Cost:

  1. Property Location: Your property’s geographical location plays a significant role in determining insurance costs. Properties in areas prone to severe weather, high crime rates, or other risks will typically have higher premiums.
  2. Size of the Property: Larger properties or those with multiple units tend to cost more to insure because they often pose a greater liability and have more physical space at risk.
  3. Age of the Property: Older properties can often lead to higher insurance costs as they are more susceptible to issues that result in claims, such as plumbing problems or electrical failures. Insurers consider the increased risk of maintenance issues and the likelihood of needing significant repairs.
  4. Security Features: Properties equipped with security measures such as burglar alarms, fire suppression systems, and gated entries may qualify for reduced premiums. These features reduce the likelihood of theft, vandalism, and extensive fire damage, which can lower the rental property’s risk profile.

Comparison with Homeowners Insurance Costs:

Landlord insurance is typically more expensive than homeowners insurance due to the increased risks associated with renting out a property. Tenants may not care for a property as diligently as an owner might, leading to greater potential for damage and claims. Additionally, landlord policies often include coverage for lost rental income and higher liability limits, further driving up the cost compared to standard homeowners insurance.

While the exact difference in cost will vary, landlords can generally expect to pay about 15% to 20% more for landlord insurance compared to homeowners insurance, depending on the coverage levels and the specifics of the property and its location.

By understanding these factors and how they compare to homeowners insurance, landlords can make more informed decisions about their insurance needs and budget accordingly for the costs associated with renting out their property.

Conclusion: Securing Your Investment with Landlord Insurance

Landlord insurance is an indispensable tool for anyone renting out a property, providing robust protection against a range of risks from property damage and liability to loss of rental income. 

As we’ve explored, understanding the coverage options available and recognizing what is not included under a standard policy can help you tailor your insurance to meet the specific needs of your rental situation. While it is not legally required, having landlord insurance is a prudent decision to safeguard your investment and financial well-being. 

At Old Harbor Insurance, we are dedicated to assisting you in navigating these choices, ensuring that you have the optimal coverage to protect your rental properties and your future. Whether you’re a first-time landlord or have a portfolio of rental properties, taking the time to assess your insurance needs can provide peace of mind and financial security in this dynamic market.


What’s the difference between landlord insurance and homeowners insurance?

Landlord insurance is specifically designed for rental properties and includes coverage for property damage, liability, and potential loss of rental income. Homeowners insurance is intended for owner-occupied homes and primarily covers the home and personal belongings.

Does landlord insurance cover tenant damage?

Landlord insurance typically covers damage to the property structure caused by tenants, but it does not cover damage to tenants’ personal belongings. For their belongings, tenants need their own renters insurance.

Is landlord insurance required by law?

No, landlord insurance is not legally required, but it is highly recommended to protect your investment. Additionally, some lenders may require you to have landlord insurance as a condition of a mortgage on a rental property.

Can I get landlord insurance for a property I live in and rent out?

Yes, you can obtain landlord insurance for a property you live in and rent out part of it; however, the coverage may need to be specifically tailored. It’s important to disclose this situation to the insurer to ensure appropriate coverage.

What can increase the costs of landlord insurance?

Several factors can increase the cost of landlord insurance, including property location in high-risk areas (like flood zones), older properties, larger properties, and lack of security features. Additionally, offering short-term rentals can also lead to higher premiums.