What Does Landlord Insurance Cover? Your 2025 Guide

According to the Insurance Information Institute, the average property claim for fire and lightning damage cost $83,519 between 2018 and 2022. For a landlord, an unexpected disaster like that could be financially devastating. 

Can your rental investment survive a major disaster? This is just one of the many reasons why you need landlord insurance. Let’s find out what landlord insurance is and what it does and doesn’t cover and the add-on protection to consider.

What is Landlord Insurance?

A landlord insurance policy is a specialized property and liability contract designed for income-generating dwellings. It combines home coverage with business-grade protections, ensuring rental income and assets stay secure when insured hazards strike.

What Does Landlord Insurance Cover?

A good insurance for landlords is designed to protect your investment from serious financial loss. 

While all landlord insurance policies can be customized to fit your needs, they are built around providing three essential types of rental property cover.

1. Property Damage

Your landlord insurance for rental property protects the main house, and often other structures like a garage or fence, from perils like:

• Fire and smoke
• Windstorms and hail
• Water damage from plumbing issues

This is the foundation of landlord property insurance. This coverage helps you pay to repair the physical building if it's damaged by a covered event.

2. Liability Protection

Your landlord liability insurance coverage is also crucial for your financial safety. If a tenant or their guest gets injured on the property and you're held legally responsible, this protection helps pay for the costs. 

For example, if someone falls due to a broken step, this part of the policy can cover their medical bills and your legal defense fees up to your policy's limit.

3. Loss of Rental Income

What if a covered event, like a major storm, makes your unit unlivable? You can't collect rent, but your own bills don't stop. This is where your landlord insurance helps. 

This special coverage reimburses you for the loss of rental income you would have received while the property is being repaired, helping you stay financially stable during a difficult time.

Optional Landlord Insurance Riders or Add-on Protection

Even the best landlord policy may leave gaps. The riders below let a basic rental property insurance coverage package evolve into a comprehensive landlord protection policy. Here are some of what landlord insurance does not cover for optimal protection:

Rent Guarantee Coverage

Rent guarantee coverage attaches rent reimbursement to landlord tenant insurance policies. The insurer pays the scheduled rent if the property is unusable after a covered peril, keeping income predictable.

Tenant Vandalism Coverage

Tenant vandalism coverage adds payment for intentional damage by occupants to property insurance for rental property. Many landlord insurance policies exclude this risk without the rider.

Flood and Earthquake Endorsement

Flood and earthquake landlord insurance coverage extends landlord house insurance and landlord building insurance to include damage from flooding or seismic activity, perils commonly excluded in base contracts.

Sewer and Drain Backup Rider

Sewer and drain backup add on pays for cleanup and repairs when wastewater backs up into the structure. The add on fills a common gap in an insurance landlord package.

Equipment Breakdown Protection

This coverage replaces or repairs boilers, HVAC units, and major appliances after a sudden mechanical or electrical failure. Most landlord policies treat this as an optional endorsement.

Burglary Endorsement

Burglary insurance rider covers damage to doors, windows, and landlord-owned contents after a break-in, even interior items, as long as the dwelling has not been vacant for 90 days.

Rental Property Under Construction

This coverage applies dwelling rental protections while a unit is being built, gutted, or renovated and is not yet occupied. It keeps the building insured until tenants move in.

Building Code Coverage

Reimburses the extra cost required to bring repaired areas up to current local codes, such as upgraded wiring or ventilation, when rebuilding after a covered loss.

Property Types Landlord Insurance Cover

Here are some common property types that landlord insurance coverage can apply to:

• Single-Family Homes
• Condos
• Multi-Unit Properties
• Townhouses
• Condo units
• Short-term Vacation Rentals

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FAQs about Landlord Insurance

Can tenants be covered under landlord insurance?

No, landlord insurance does not cover tenants’ personal belongings or liability. Tenants need their own renters' insurance to protect their personal belongings and hold them accountable for any liability.

‍Is landlord insurance required by law?

No, it’s not legally required. However, most mortgage lenders will need it if you have a loan on the rental property. Even without a loan, it’s strongly recommended to protect your investment.

What are the benefits of landlord insurance?

It protects your rental property from damage, covers legal liability if someone gets injured on-site, and may reimburse you for lost rental income after a covered event. Some policies also offer extras, such as short-term rental or protection against vandalism.

‍What risks are covered by landlord insurance?

Typical risks include fire, storm damage, water damage (not from flooding), theft of landlord-owned items, and liability claims. Coverage varies, so it’s key to check the policy details and consider add-ons if needed.