Landlord Insurance Cost

If you're a landlord, you already know the importance of protecting your rental properties. One way to do this is by getting landlord insurance. But how much does landlord insurance cost? On average, landlords should expect to pay around $1,200 to $1,500 per year for this type of coverage. However, the cost can vary depending on several factors, such as the location of your property, the type of coverage you need, and the value of your property.

In this article, we'll delve into the specifics of landlord insurance costs, so you can make an informed decision about what's best for you and your rental properties. We'll cover everything from the average cost to the factors that affect it, so you'll have a better idea of what to expect when you start shopping for landlord insurance.

What Is Landlord Insurance? What Does It Cover?

Landlord insurance is designed to protect rental property owners from financial losses related to their properties. Landlord insurance is composed of two parts:

• Property damage: Protects your property (including the buildings themselves, pools, sheds, and even your equipment)
• Liability coverage: Protects you in case someone gets harmed on your property (including tenants and visitors)

While your landlord insurance has two distinct parts, there are also a variety of coverage types that may be useful to you as a property owner. These types include:

• Dwelling coverage: This covers damage to the physical structure of the rental property, including the roof, walls, and foundation.
• Additional structures coverage: This covers any buildings on the property that are not part of the main dwelling, such as a garage or shed.
• Personal property coverage: This covers any personal property that you, as the landlord, keep on the rental property, such as appliances or furniture.
• Income loss coverage: This covers any lost rental income if your property is damaged and uninhabitable.
• Medical payments coverage: This covers medical expenses for anyone who is injured on your rental property.
• Liability coverage: This covers legal fees and damages if you're sued for injury or property damage caused by your rental property.

How Much Does Landlord Insurance Cost?

A landlord insurance policy can cost about 25% more than a comparable homeowners policy, according to the Insurance Information Institute.

When it comes to landlord insurance, it's hard to pinpoint a single average cost. The national average for $300,000 worth of homeowners insurance coverage is about $1,854 per year, but estimates from the Insurance Information Institute suggest that the average cost for similar coverage with landlord insurance could be around $2,317 per year. However, costs can fluctuate greatly based on a number of factors, including the state, county, city, and even specific location of your rental property.

The type of rental property you own also plays a big role in determining the cost of your insurance coverage. Whether it's a condo, single-family home, multi-family building, retail space, office, or industrial property, the coverage you need and the associated costs will vary. Additionally, the size, age, and type of construction of your property can impact how much it would cost to rebuild in the event of damage or destruction, which also affects your insurance rates.

So, what's the best way to get an accurate estimate for your landlord insurance? Start by speaking with an independent insurance agent. They can help you understand the coverage options available to you and work with you to find a policy that meets your unique needs and budget.

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How Landlord Insurance Costs Are Calculated

The cost of landlord insurance is calculated based on a variety of factors that can differ greatly from one property to another.

To get a better idea of how much rental property insurance will cost, you'll need to consider the specific types of coverage you require.

• For example, if you're looking to cover the physical structure of your rental property, the cost will depend on how much it would cost to rebuild or repair the property in case of damage or destruction.
• By the same token, if you need liability coverage to protect against claims made by tenants or visitors, the cost will depend on the amount of coverage you require, and the likelihood of such claims being made.

It's important to keep in mind that every property and its owner have unique circumstances that can affect the cost of landlord insurance. That's why it's always a good idea to speak with an experienced insurance agent who can provide you with a personalized landlord insurance quote. By doing so, you can ensure that you have the coverage you need to protect your rental property, without overpaying for unnecessary coverage.

Factors Used to Calculate the Cost of Landlord Insurance

There are several factors that affect the cost of your plan, including regional differences, but when an insurance company is preparing your policy, these are the things they’re thinking about:

Square Footage of the Home

Larger homes have more volume to repair or rebuild, so the base portion of a landlord policy will be determined by the size of the home and any additional structures.

Value of the Home

More expensive properties cost more to insure because they cost more to repair or replace.

Age and Materials of Home Construction

Older homes are more complex to repair, especially because parts may be hard to come by and because repairs may require older homes to be brought up to current code, which adds to the expense.

Tenancy

Long-term tenants on year-long leases suggest stability and a clientele that is likely to continue paying rent and care for the property as if it were their own. A series of short-term monthly leases suggests that tenants are less invested in the property and more likely to cause damage, resulting in higher premiums.

Location (Crime Risk)

The crime rate in the area where the building is located can affect the cost of landlord insurance. High-crime areas with lots of vandalism or break-ins are perceived as higher risk and cost more to insure.

Environmental Risks

Areas that are likely to be hit by natural disasters are a huge threat to the profit margin of insurance companies. As a result, the premiums for insurance policies in these areas will likely be higher than in lower-risk areas.

Coverage Maximums

Increasing the coverage maximums for your policy may protect you more thoroughly but will drive up your rate.

Add-On Coverage

Additional coverage options like guaranteed income, flood, and emergency coverage will drive up your overall cost.

Homeowners Insurance Cost vs. Landlord Insurance

Homeowners insurance is designed to protect your primary residence, while landlord insurance is specifically tailored to protect rental properties. As a result, landlord insurance policies typically include coverage for additional risks that homeowners policies do not cover, such as loss of rental income, liability claims related to tenant injuries, and damage caused by tenants.

It's also worth noting that homeowners insurance and landlord insurance are not interchangeable. If you own a rental property and rely on your homeowners insurance to cover any damage or liability claims, you may be in for an unpleasant surprise.

Homeowners policies specifically exclude coverage for rental properties, which means that if something happens to your rental property, you won't be covered. This is why it's important to invest in a landlord insurance policy to protect your rental properties adequately. While landlord policies generally cost about 25% more than homeowners policies, the extra coverage they provide is well worth the investment.

Three Types of Landlord Insurance Coverage

Think of landlord insurance as a type of dwelling insurance that follows the same tiers of coverage as other policies. These tiers define which types of perils or causes of loss are covered, and they include DP-1 (basic), DP-2 (broad), and DP-3 (special). So, depending on the level of coverage you choose, your landlord policy can protect against a wide range of risks, from basic damage to more extensive issues like fire, theft, or natural disasters.

Let’s take a look at each.

DP-1

This is the most basic form of landlord insurance and generally provides coverage for damage caused by named perils, such as lightning, fires, and windstorms. However, DP-1 policies do not cover damage caused by other common perils, like water damage, vandalism, or theft. This type of policy is generally the most affordable option but provides the least amount of coverage.

DP-2

This type of landlord insurance policy provides more comprehensive coverage than a DP-1 policy, covering damage caused by a wider range of perils. In addition to the named perils covered under a DP-1 policy, DP-2 policies also typically cover damage caused by falling objects, freezing, water damage, and more. While more expensive than a DP-1 policy, a DP-2 policy provides more comprehensive coverage and can be a good option for landlords who want more protection.

DP-3

This is the most comprehensive type of landlord insurance policy, providing coverage for all perils unless specifically excluded. DP-3 policies generally cover everything from fire and theft to water damage to natural disasters. While it is the most expensive option, a DP-3 policy provides the most extensive coverage and can be a good choice for landlords who want maximum protection for their rental properties.

How to Find Landlord Insurance Discounts

When it comes to landlord insurance discounts, there are several ways to save money and reduce your overall costs. These include:

• Installing security features such as smoke alarms, carbon monoxide detectors, and security systems to reduce the risk of damage or injury.
• Eliminating high-risk features from your rental property, such as pools or hot tubs, which can increase the risk of accidents and injuries.
• Bundling your insurance policies with the same company to take advantage of multi-policy discounts.
• Working with an independent insurance agent who can help you find the best rates and coverage options.
• Taking advantage of professional association discounts if you belong to a relevant trade or industry organization.
• Opting for a higher deductible to lower your monthly premiums, though it's important to ensure you can afford the deductible if you need to file a claim.

By utilizing these cost-saving measures, you can find ways to save money on your landlord insurance policy and ensure you have the coverage you need for your rental properties.

Connect with an Independent Insurance Agent to Compare Landlord Insurance Rates

Comparing policy rates by yourself can be complicated. There's a ton of information and confusing language to digest. But here's where an agent can save the day for you. They know everything that's important to consider when comparing rates and will help walk you through it all.

An independent insurance agent can make your life a lot easier through this process. Since they're not tied down to one insurance company, they're free to shop, compare, and assemble all the pieces of the coverage puzzle for you.

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Our independent agents shop around to find you the best coverage.

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FAQs about the Cost of Landlord Insurance