Is a Rental Dwelling Policy The Same as Landlord Insurance?

Laura Olson
Aug 29, 2022

As a landlord, it's important to be aware of the different types of rental dwelling insurance policies available.

This blog post will discuss the key things that landlords need to know about rental dwelling insurance policies and also provide tips for choosing the right rental property policy.

Rental Dwelling Policy and Landlord Insurance

When it comes to insuring your rental property, a rental dwelling policy (also called landlord insurance) is designed to protect property owners who rent out their homes.

This type of policy can help cover the cost of repairs if the rental property is damaged by a covered peril, provide liability coverage if a tenant is injured on the property and sues the landlord, and may reimburse a landlord for lost rental income if tenants have to move out due to damages from a covered peril.

Some rental dwelling policies also include loss of rent coverage, which can help a landlord during the repair period after a covered loss. It's important to check with your insurance company to see what types of coverage are included in your policy, as coverage may vary depending on the insurer.

Types of Perils Typically Covered by Rental Dwelling Policies

Rental dwelling policies typically cover damages from common perils such as fire, windstorm, hail, and lightning. Some rental dwelling policies also provide limited coverage for theft, water damage, mold, and sewage backup. Additionally, a rental dwelling insurance policy can provide a landlord with premises liability protection.

When a tenant is injured or killed on a rental property, the landlord may be held liable. A rental dwelling policy can protect the landlord from personal liability in these cases. The policy may cover damages and legal expenses incurred by the landlord.

For example, suppose a tenant slips and falls on some ice outside the rental property. The tenant sues the landlord, claiming that the landlord was negligent in shoveling the sidewalk. If the landlord has a rental dwelling policy, the policy may pay for the legal costs associated with defending the lawsuit.

Does rental dwelling coverage protect against tenant damage?

Property damage caused by tenants is typically not covered by rental dwelling policies. However, many policies do provide coverage for damages caused by tenant negligence, such as a kitchen fire started by a careless cook.

What does loss of rent coverage typically cover?

Loss of rent coverage typically covers the rental income that a landlord would have earned if the rental property had not been damaged and tenants were unable to stay. Loss of rental income coverage can help hold a landlord over during the repair period after a covered loss.

How Much Does a Rental Dwelling Insurance Policy Cost?

As a general rule, rental dwelling insurance costs about 25% more than a standard homeowners insurance policy. However, insurance premiums for investment property can vary widely (from $800 to $3,000 per year for a 3 bed/2 bath single-family rental, depending on the state), because every home is unique and every landlord has different coverage needs.

An excellent way to learn how much a rental dwelling insurance policy costs for your property is by getting a free instant quote online with Obie.

Obie offers insurance specifically built for landlords and real estate investors. Landlord insurance through Obie is available in all 50 states, and investors have insured more than $4 billion in property to date.

When shopping around for a rental dwelling insurance policy, keep in mind there are many factors that carriers take into consideration when calculating premiums. Some of these factors are within your control, while others are not.

Here is a list of some of the most common factors that can affect your rental dwelling insurance rates:

  • Location of the rental property: Insurance companies will often charge higher rates for rental properties located in areas with high crime rates or natural disaster risks.
  • Type of dwelling: Insurance companies will typically charge higher rates for rental properties that are considered to be high-risk, such as those with a lot of stairs or those made of flammable materials.
  • Value of the dwelling: The more valuable the rental property, the more it will cost to insure.
  • Occupancy of the dwelling: Insurance companies will often charge higher rates for rental properties that are unoccupied for long periods of time, as these are considered to be higher risk.
  • Claims history of the dwelling: If the rental property has a history of insurance claims, the insurance company will likely charge higher rates.
  • Credit history  of the landlord: Insurance companies will sometimes use the landlord's credit history as a factor in determining rates, as those with worse credit history are considered to be more high-risk.

As you can see, there are a number of factors that carriers look at when calculating premiums. However, there are also several things that landlords can do to help keep the cost of their rental dwelling insurance policy low.

One is to make sure that their rental property is well-maintained and in good condition. This will help to reduce the chance of a claim being made against the policy. Another thing that landlords can do is to carefully select their tenants. Screening potential tenants thoroughly can help to ensure that only those who are likely to be responsible renters are chosen.

Raising the deductible will also lower the rental dwelling insurance premium, but will result in the landlord paying more out-of-pocket if there is a claim. Finally, landlords should keep up with the latest safety trends and technologies to ensure their rental property is as safe as possible.

By taking these steps, landlords can help to create an environment that is less risky for insurers, and ultimately help to keep the cost of their rental dwelling insurance policy down.

Tenant Renters Insurance Can Also Help Reduce Costs

Renters insurance is a type of insurance policy that helps protect tenants from financial losses in the event that their personal property is damaged or destroyed or in event the tenant is held personally liable for another person’s injuries. By requiring tenants to take out a renters insurance policy, landlords may help reduce the cost of their own rental dwelling policy.

Landlords often require tenants to purchase rental insurance as a way to limit their own liability if something happens to the property. For example, if a tenant's belongings are damaged or destroyed in a fire, the landlord's policy may not cover those losses. However, if the tenant has rental insurance, they can file a claim with their insurer to help cover the cost of replacing their belongings. In another example, a person injured on a landlord’s property can sue the landlord for negligence. By requiring a tenant to have a renters policy, landlords may mitigate this risk as the tenant’s liability insurance may provide coverage.  

In some cases, insurance carriers may even offer a discount on a landlord's rental dwelling policy if tenants can show proof that they have rental insurance. This is because having rental insurance often means that the landlord may have to pay out less in claims, since the tenant's insurer may cover some of the damages.

Requiring tenants to take out renters insurance can therefore help reduce the cost of a landlord's rental dwelling policy. It is important to note, however, that not all states allow landlords to require tenants to have rental insurance. So, be sure to check before including this in your lease agreement with the tenant.

Where to Get a Rental Dwelling Policy

There are a few different ways that you can go about getting a rental dwelling policy.

Two traditional options are to talk with your existing insurance agent or work with an insurance broker. However, you may not be getting the right type of coverage if the people you speak with are more familiar with homeowners insurance than they are with rental property.

That’s why many landlords are turning to Obie. you can purchase a policy online through a rental dwelling insurance broker like Obie. Whether you're a seasoned investor or just starting out, Obie makes requesting a quote and getting coverage simple, affordable, and transparent. No paper applications, week-long waits for quotes, or back and forth with brokers.

Obie works with a variety of top-rated insurers, so you can be sure you’re getting the best protection at the most competitive price. On average, landlords can save up to 25% with Obie.

Give Obie a call today or visit the website to learn more about the rental dwelling insurance policies and how Obie can help you protect your rental property.