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Knowing your insurance expenses upfront helps you budget accurately and avoid surprise costs if damage strikes. In this blog post, we’ll uncover the main factors that drive your premiums, compare different coverage options, and learn smart strategies to lower your rates.
2025 Average Landlord Insurance Costs by State
Here's a table with rough estimates of landlord insurance costs for various states. Remember these are averages, and your actual rate might be different.
Landlord Insurance vs. Homeowners Insurance Cost
Landlord insurance is typically 15% to 25% more expensive than homeowners insurance for the same property. The higher cost of landlord insurance vs homeowners insurance is directly tied to the increased risks associated with renting out a home.
So why does landlord insurance cost more than homeowners insurance?
- Higher Risk of Claims: Insurers see rental properties as a bigger risk. Tenants may not maintain a property with the same care as a homeowner, leading to a higher likelihood of property damage claims.
- Increased Liability Coverage: As a landlord, you face greater liability risks. If a tenant or their guest gets injured on your property (e.g., from a fall or a faulty appliance), you could be sued. Landlord policies include broader liability protection to cover these legal risks, which increases the premium.
- Loss of Rent Coverage: A crucial feature of landlord insurance is protection for your rental income. If a covered event (like a fire) makes your property unlivable, this coverage replaces the lost rent during repairs. This valuable financial safety net is a primary driver of the higher cost.
- Tenant-Related Risks: The simple act of having tenants increases the chances of claims, from accidental damage to potential neglect. Insurers factor this elevated risk of "wear and tear" and other tenant-related issues into the price.
What Factors Affect Landlord Insurance Premiums?
Several key factors influence how much you’ll pay for landlord insurance. Keeping these in mind can help you find the right balance between coverage and cost:
- Property Location: Premiums tend to be higher in areas prone to natural disasters (floods, earthquakes) or with higher crime rates.
- Building Age and Condition: Older homes or those with outdated wiring, plumbing, or roofing can be costlier to insure because they pose greater repair risks.
- Type of Coverage and Limits: The more protection you choose (for example, covering loss of rent or legal expenses) and the higher your coverage limits, the higher your premium will be.
- Deductible Amount: Opting for a higher deductible (the amount you pay out of pocket before insurance kicks in) can lower your premium, but you’ll pay more upfront if you file a claim.
- Claims History: If you’ve filed multiple insurance claims in the past, insurers may view your property as higher risk and charge you more.
- Property Features and Safety Measures: Homes with security systems, smoke detectors, deadbolts, or storm shutters often qualify for discounts because they reduce the likelihood or severity of a claim.
- Tenant Profile and Use: Renting to long-term tenants with strong rental histories typically costs less than short-term or vacation rentals, which can experience more wear and tear.
Connecticut Landlord Insurance Example: What Coverage Looks Like in Real Life
To better understand how landlord insurance plays out in practice, let’s look at a real rental property in New Haven, Connecticut. The property is a 2,400-square-foot duplex located near Yale University, fully rented to long-term tenants bringing in $3,200 per month. The home was purchased in 2021 for $610,000, and the owner estimates the replacement cost at around $480,000, or $200 per square foot.
After reviewing several options, the landlord chose a policy from a regional carrier for $1,720 per year, aligning with the typical insurance range in Connecticut.
Here’s how the coverage breaks down:
- Dwelling: $480,000 limit, $2,000 deductible
- Other Structures: $48,000 limit (for fencing, sheds, etc.)
- Landlord’s Personal Property: $7,500 limit
- Loss of Rental Income: $38,400 limit (roughly 12 months of rent)
- Vandalism Coverage: Included, up to dwelling limit
- Liability Protection: $1 million
- Medical Payments: $5,000
Annual Cost Breakdown by Coverage:
- Dwelling Coverage: $1,260
- Personal Property: $40
- Vandalism Protection: $240
- Liability and Medical Payments: $180
The largest share of the premium covers the dwelling; that’s because this is the part that would pay to rebuild the structure after a major covered loss like a fire. Meanwhile, personal property and liability coverages are relatively inexpensive since they involve lower risk or payout potential.
The Hidden Risk: The Valuation Clause
While the landlord feels protected, there’s a detail that changes everything: the policy uses Actual Cash Value (ACV) instead of Replacement Cost Value (RCV). That’s a critical distinction.
Take the roof, for example. If it originally cost $30,000 to install but is now 15 years old, the insurer might apply $15,000 in depreciation. With ACV, the payout would only be $15,000 — and once the $2,000 deductible is subtracted, the actual reimbursement would be just $13,000. That leaves the landlord responsible for the remaining $17,000 to replace the roof at full cost.
Key Takeaway
Even with adequate coverage limits, the valuation method can make or break a claim. In high-value markets like Connecticut, landlords are often better served by paying slightly more for Replacement Cost coverage to avoid paying thousands out-of-pocket during a loss. Always read the fine print, and don’t assume you’re fully protected just because you have a policy in place.
Protect Your Rental Property Without Breaking the Bank
Looking for reliable landlord insurance that fits your budget? Obie Insurance offers cost-effective coverage tailored to your rental property’s unique needs. With transparent pricing and no unnecessary add-ons, you only pay for what matters. Whether you manage one unit or several, Obie helps keep your investment safe—without the hefty price tag. Get a fast, free quote online and see how much you can save with Obie today.
FAQs about Landlord Insurance Cost
How much is landlord insurance for a single-family home?
Landlord insurance for a single-family home typically costs between $800 and $3,000. It depends on the location, property value, coverage limits, and risk factors.
How often do Obie landlord insurance premiums increase?
Landlord insurance premiums from Obie, and most any insurance company for that matter, can increase annually at the time of policy renewal due to inflation, increased claims in the area, or changes in property value or risk profile.
How to lower landlord insurance premiums?
You can lower premiums by increasing your deductible, bundling with other policies, installing safety features like smoke detectors or security systems, and shopping around for competitive quotes.
Is landlord insurance tax deductible?
Yes. In most cases, landlord insurance premiums are tax-deductible as a business expense if the property is used for rental income. Always consult a tax advisor for your specific situation.
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