As a landlord, you know your rental property is a significant investment. And while you’ve taken steps to protect it, from conducting background checks on tenants to performing regular maintenance, unforeseen events can still occur. That's why single-family rental (SFR) insurance is essential.
SFR insurance is a type of coverage specifically designed for landlords renting out single-family homes. In this article, you'll learn what SFR insurance is, why landlords need it, and how to choose the right policy.
With this knowledge, you'll be better equipped to protect your rental property investment for years to come.
Looking to protect yourself and your SFR portfolio? Get an instant quote from Obie today. No paper applications, week-long waits for quotes, or back-and-forth with brokers.
Understanding SFR Insurance
Homeowners insurance is designed for personal residences and does not offer adequate coverage for rental properties. For example, a homeowners policy won’t usually include covereage for loss of income if a rental property becomes uninhabitable due to a covered loss, or coverage for issues like tenant-caused damage.
Instead, landlords need SFR real estate insurance, which provides coverage specific to the unique risks of renting out a single-family home. An appropriate SFR policy offers long-term protection so you can invest in real estate and manage your properties with confidence.
Types of Policies Available
SFR insurance policies can vary depending on the insurance company and the level of coverage you need. Many standard SFR insurance policies include coverage for property damage, which covers the structure and personal property, and liability insurance, which covers injuries to tenants or their guests on the property:
DP1 (Basic Form): A DP1 policy is the cheapest type of SFR insurance policy and offers the least coverage. It typically only covers specific named events, such as fire and lightning, while excluding others, such as water damage or theft.
DP2 (Broad Form): A DP2 policy typically offers more comprehensive coverage than DP1 policies. It protects against home and personal property damage from a broader range of perils, including falling objects, weight from heavy snow or ice, and more.
DP3 (Special Form): A DP3 policy offers the most comprehensive coverage for a rental property. It covers all perils except those expressly excluded in the policy. This policy protects your rental property investment against all kinds of risks and hazards.
Coverage Provided Under SFR Insurance
The coverage available under SFR property insurance may vary based on the policy and the insurance carrier. Some typical protections provided include:
Natural disasters (such as floods and hail)
Fire and smoke damage
Theft and vandalism
Loss of rental income
Legal fees and court costs
Natural disasters typically covered in a standard SFR insurance policy include fire and smoke damage, thunderstorms and lightning, hail damage, wind damage, and flooding from heavy rainfall.
However, natural disasters generally excluded from standard SFR policies are earthquakes, sinkholes, hurricanes, and floods. The potential for these natural disasters can differ widely from one location to the next.
When insuring your rental property, evaluating your location's risk factors and ensuring your SFR insurance protects you against natural disasters that may pose a risk to your rental and tenants is essential. Search the Obie risk map to learn about the natural risks in your area and be prepared with the right insurance for your rental property.
How to Find the Best SFR Insurance
Finding the ideal SFR insurance policy for your rental property can be complex and time-consuming. But with the right approach, you can acquire an affordable policy that provides comprehensive coverage for your needs. Here are some tips on how to get started in finding the best SFR insurance.
Understand Your Coverage Needs
Different policies offer different levels of coverage depending on your specific requirements. Research your options carefully and understand which perils are covered and excluded by each policy before deciding on one.
Evaluate Policy Details Carefully
Read through the details of each policy carefully before making a decision. Consider the deductible amount, claims process, customer service ratings, and other critical factors to ensure any potential drawbacks or limitations fit your budget and risk tolerance level.
Compare Rates and Quotes
Compare rates and quotes from several providers to find the most competitively priced policy for your needs. Obie can help you do this by quickly and effortlessly offering instant insurance tailored to fit the needs of SFR landlords and real estate investors.
To get started, enter the street address of your rental property in Obie’s online system to receive a quote for single-family rental landlord insurance right now. Coverage is available in all 50 states, and Obie has already insured more than $10 billion worth of properties to date.
More SFR Insurance Providers
Obie is a great way to find SFR insurance online quickly and easily. If you may prefer to shop for quotes on your own, here are a few insurance companies for property owners to consider, listed alphabetically.
As a reliable industry leader with over 90 years of experience in insurance services and excellent financial stability, Allstate stands out for its comprehensive home and landlord insurance offerings. It boasts an A+ (Superior) AM Best rating and one of this list's highest BBB ratings (A+).
Since its founding in 1928, Farmers Insurance has become one of the largest home insurers in the US, with over 7.6 billion in direct premiums written. It operates across all states except Washington, DC, and provides access to over 48,000 independent insurance agents and 21,000 employees. Moreover, Farmers has earned a BBB rating of A- and an A rating from AM Best.
Liberty Mutual is a trusted and experienced home insurance provider and been in business for over 100 years. With an A (Excellent) rating from AM Best, indicating strong financial stability, Liberty Mutual offers customizable policies to cover dwelling repairs/rebuilding, liability incidents on the property, wind/hail damage, and fair rental value coverage.
State Farm has an impressive financial strength rating of A++ from AM Best and AA from S&P Global Rating.
Established in 1922 by a retired farmer, State Farm is the top insurer of cars and homes in the US and scored in the top 5 for customer satisfaction according to J.D. Power's 2021 US Homeowners Insurance Study. Its landlord policies cover buildings, attached structures, liability, loss of income, and more.
Travelers has been a leading insurer for property and casualty since 1864, earning an A++ rating from AM Best (the highest possible) and an A rating from the BBB, and has 30,000 employees and 13,500 agents. It offers comprehensive rental property insurance policies that cover dwellings, other structures, liability, medical payments to others, and more.
Established in 1922, USAA has an A+ BBB rating, an A++ AM Best rating, and excellent customer service. It offers discounted home insurance policies for up to 10 rental properties with coverage for structures, liability, and lost rent during the repairs of a claim, as well as home-sharing protection.
Additional Insurance Resources
With the right SFR insurance, you can make sure your income, assets, and return on investment are a safe as possible. To learn SFR insurance and other insurance policies for landlords, explore these other articles from Obie: