What Is Landlord Insurance? How Does It Work? (2026)

What Landlord Insurance Is

Landlord insurance, commonly called a “dwelling fire policy,” is a specific type of home insurance designed for homes you own and rent to tenants. It aims to cover damage to the structure of the rental property itself, but some policies include additional coverage for personal property damage and loss of rental income.

Most of these policies also come with liability coverage to help shield the landlord from potential legal claims.

Why Homeowners Insurance Won't Cover a Rental

If you thought a standard homeowners insurance policy would cover a home you’re renting, you’re not alone. However, there are a number of reasons that homeowners insurance policies won’t typically cover rental properties:

• Standard homeowners insurance policies require the owner to live in the home.
• Standard homeowners insurance policies also specifically exclude commercial operations.
• Having renters in the home increases wear and tear.
• With multiple renters and their guests on the property, the risk of liability claims inevitably goes up.
• Coverage for loss of rental income means the insurer could potentially end up giving you a significant payout.

Essentially, your homeowners insurance policy won’t cover your rental home because tenants add another level of risk. That’s also why policies for landlords tend to be more expensive than homeowners insurance policies.

Types of Landlord Insurance Coverage

Just like many other types of insurance policies, insurance for landlords comes with several coverage options. These are some of the key ones to consider:

Property and Dwelling Coverage

This is perhaps the most important type of coverage. Property and dwelling coverage pays for damage to the structure of the building, as long as the damage was due to a covered peril.

Each insurance company creates its own list of covered perils. This list usually includes events like fire, hail and heavy wind. Notably, almost no private insurance companies will insure homes against floods.

Landlord Liability Coverage

You might already know that a tenant’s renters insurance policy will usually include protection from liability. So why do you need liability coverage as well?

If your tenant (or even one of your tenant’s guests) gets hurt because of a maintenance issue you failed to fix, you could be on the hook for medical care and other compensatory damages. Liability coverage can pay for legal fees, court costs and medical bills/monetary settlements.

Loss of Rental Income Coverage

When you have even a basic policy, you’ll know that repairs can be paid for if your home is damaged. But what about your lost rental income?

Many policies for landlords offer coverage for loss of rental income. If the home has to undergo repairs due to a covered event and you can’t rent it out, your policy can replace some or all of the income you lost.

Optional Coverages to Consider

In most cases, insurance companies let you fully customize your coverage. If you leave lawnmowers, garden tools or other items on-site at the home, it might be worth getting personal property coverage. Keep in mind that this option won’t usually cover your tenants’ belongings.

Another optional add-on to consider is tenant vandalism/burglary coverage. Even though your core property and dwelling coverage can pay to fix structural damage, most policies won’t pay for damage tenants cause on purpose.

What Landlord Insurance Doesn't Cover

Finding the right insurance coverage is a key part of rental property management. And if you’ve already selected your landlord insurance policy, it’s also important to be aware of what it usually won’t cover:

• Normal wear and tear
• Regular home maintenance
• Tenant belongings, which are covered by the tenant’s renters insurance policy
• Sewage backups and mold
• Floods, earthquakes and other natural disasters

You will need to decide whether you want to purchase additional coverage to shield you from these risks. For example, if your rental home is in a flood-prone area, you might consider getting insurance through the National Flood Insurance Program (NFIP).

How Much Landlord Insurance Costs

As you’re looking at landlord insurance costs, you’ll find that for most single-family homes, coverage will cost you anywhere from $800 to $3,000 per year.

Landlord Insurance vs. Renters Insurance

When you’re relatively new to the world of rental property insurance, it’s easy to mix up landlord insurance and renters insurance. Both types of insurance are related to your rental property, but they are designed to cover different things:

• Landlord Insurance: Protects you and the structure of your rental home
• Renters Insurance: Protects the tenant and their belongings

Both types of insurance can be customized and expanded, but these core differences continue to set them apart.

The Right Insurance Matters

Poring over your insurance coverage options and selecting a policy that suits your business can be time-consuming and tedious, but it’s well worth it. You’ve worked hard to get your business to where it is today. The right insurance can protect you against losses and help you continue to grow your property management portfolio.