Rental Property Insurance:

Owning a rental property can be a great investment—but it comes with risks. Tenants, natural disasters, liability issues, and unexpected damages can turn a profitable property into a financial headache. Rental Property Insurance is your safety net, keeping your investment—and your wallet—protected.

Think of it as the shield that protects both your property and your peace of mind.

What Rental Property Insurance Covers

Rental property policies are similar to homeowners insurance but tailored for properties you rent out. Key coverage areas include:

1. Property Damage

Covers the physical building itself in case of:

• Fire, storms, or other natural disasters (Earthquake coverage is an add-on)

• Vandalism or malicious damage by tenants

• Theft of building fixtures or appliances

• Optional add-ons for detached structures, garages, or fences (Many policies include this by default)

It’s important to note that exact property coverages will determined by your coverage form. Common coverage forms are DP-1, DP-2, DP-3, and CP 00 10(modified by cause of loss forms).

2. Liability Coverage

Protects you if a tenant or visitor is injured on your property:

• Medical costs and legal fees

• Accidents caused by unsafe conditions on the property

Liability coverage is essential—lawsuits can quickly exceed the value of the property if uninsured.

3. Loss of Rental Income

If a covered event makes the property uninhabitable, this coverage replaces the lost rental income until repairs are complete.

This ensures your cash flow keeps running, even when your tenants can’t live in the property.

4. Optional Add-Ons

Many of the optional endorsements available on a standard home policy are available on rental policies as well, but not all of them.

• Ordinance & Law Coverage (Always recommended, especially on older properties)

• Appliance and Equipment Breakdown Coverage

• Service Line Coverage

• Sewer or Water Backup Coverage

• Extended dwelling coverage for major reconstruction (Always recommended)

Keep in mind that each carrier may have different endorsement options.

Customizing your policy ensures protection matches the property type, location, and tenant situation.

Factors That Affect Your Policy

• Property type (single-family, multi-family, condo, apartment)

• Type of Rental (short-term, long-term, home-sharing)

• Location and risk exposure (flood zones, high-crime areas)

• Number of tenants

• Property age and claim history

• Insurance Score (Largely Credit-Based)

• Coverage limits and deductibles

Properly tailored coverage protects your investment without overpaying.

Common Misconceptions

• “Tenants have insurance; I don’t need it.”

  Tenant insurance primarily protects their belongings, not your building.

  Most Renter’s Insurance liability will only extend to property damage on your building if caused by fire, smoke, explosion, or water damage. Refer to the renter’s insurance page for more information.

• “My homeowners policy will cover a rental.”

  Homeowners insurance typically excludes rental use—this is a different risk profile.

  However, “home-sharing” can be endorsed on many policies if you are renting out a room or a floor. Be sure to contact your Agent to confirm the coverage is adequate for your situation.

• “It’s expensive.”

  Compared to repairing damage or paying liability claims out-of-pocket, rental insurance is affordable protection. It’s often not much more than standard home coverage.

• “I’m renting to family.”

  Unless you are living there, It’s still a rental policy and they will need their own liability and property protection. Yours will not extend to all losses.

The Takeaway

Rental Property Insurance keeps your investment secure, protects tenants, and ensures your rental income continues uninterrupted. With the right policy, you can manage your property with confidence, knowing that unexpected events won’t derail your financial goals.