If you rent out a property, landlord insurance is one of the most important protections you can have. While standard homeowners insurance covers owner-occupied homes, landlord insurance is designed specifically for tenant-occupied properties. These policies may seem like they would be similar on the surface, but occupancy makes a difference in the risks facing the home – and therefore the insurance premium to secure protection.
Landlord insurance tends to cost 15% to 25% more than a standard homeowners insurance policy for a similar property. The actual cost for a specific home depends on property factors like location, age, rental term, and risk profile, but also policy factors like coverage, endorsements and deductibles.
The Difference Between Home Insurance and Landlord Insurance Costs
Landlord insurance tends to cost more than homeowners insurance because of the additional risks present when a property is occupied by tenants rather than the owner. Insurance is all about a transfer of risk – policyholders pay insurance carriers to take on some of the risk property ownership. The more risk transferred, the higher the cost. Tenant-occupied homes are riskier for a few key reasons:
- Oversight of the property: When homeowners live in their own property, they’ll typically notice – and address – maintenance issues sooner. From leaks and electrical problems to structural damage, small things can become big issues if tenants delay reporting them to the landlord.
- Probability of Property Damage: Tenants generally do not have the same long-term financial stake in the property as an owner. While most renters are responsible, insurers account for a statistically higher chance of accidental damage, neglect, or misuse of the property.
- Other Risks Through landlord insurance, property owners can get coverage for things like premises liability or loss of rental income. See what landlord insurance typically covers here. Landlords, especially those with multiple properties, have to seriously consider how they are protecting both the physical dwellings and their financial wellbeing.
How is Landlord Insurance Cost Determined for a Property?
There are many influences on your landlord insurance premium. Some factors are related to the property itself:
- Location Properties in areas with higher hurricane risk or wildfire exposure may have higher premiums. Coastal regions and states prone to natural disasters tend to see higher insurance costs.
- Property Value Insurance is largely based on how much it would cost to rebuild the property. Higher-value homes require higher coverage limits.
- Property type A single-family home would typically cost less to insure than a quadplex with four separate units.
- Age and Condition of the Building Older properties with outdated electrical, plumbing, or roofing systems may carry higher premiums because they present greater risk.
How Can You Get the Best Rate for Landlord Insurance?
The most important thing to understand when considering your landlord insurance costs is that cost is not the only important factor. You need to find the right balance of cost and risk for your specific situation, and ensure that the policy you choose offers real value.
That said, there are several things you and your insurance agent can do to help control costs – see our full guide here. The first is to look for an insurance carrier that offers you real choice.
- Protections Offered Your insurance policy protects you from specific risks, or perils – see our breakdown of insurance perils here. Policies are often categorized as open peril, meaning you are covered from every peril except those that are specifically excluded, or named peril, meaning you are covered from only the perils that are specifically listed. With Orion180, you can actually choose which perils are named on your policy, letting you select only the protection you really need.
- Coverage Customization Landlord insurance has key coverages that are typically included. With Orion180, you can drop everything except for the actual dwelling coverage for the structure of your home. This means that you don’t pay for what you don’t need.
- Deductible Selection By selecting a higher deductible, you can significantly lower your annual premium costs. Orion180 offers you a wide range of deductible choices, with higher options that can be a great choice for property owners who have savings to cover smaller repair costs, but still want catastrophic coverage.
- Other Cost-Saving Factors There are a wide range of other cost-saving measures you can discuss with your agent. For example, Orion180 offers an optional co-pay which can help some property owners maintain a lower deductible while still lowering premium costs. You can also explore available discounts, like the Orion180 Companion Policy discount. If you have a home insurance policy with us, or take a flood insurance policy, you’ll save money on your landlord insurance.
Landlord insurance is essential for anyone renting out property. While it typically costs a bit more than homeowners insurance, it provides critical protection, and savvy property owners can find the right policy for their specific needs, budget, and risk appetite. Contact your agent today or get a free quote!
This information is meant to help you understand DP Landlord Insurance, but your actual coverage will depend on the specific terms and details in your insurance contract. For questions about your exact coverage, it’s always best to review your policy or speak with your insurance agent.
