Homeowners insurance won't cover your rental
Once a property is tenant-occupied, a standard HO-3 can deny claims for misrepresentation. A DP-3 is the correct form: open-peril structure coverage, landlord liability, and loss of rents. Budget roughly 6–10% of gross rent — it's a real operating expense line in every deal analysis.
- • Require tenant renters insurance in the lease, with proof at signing.
- • Consider $1M liability plus a personal umbrella once you hold 2+ doors.
- • Short-term rentals need specialized coverage (Proper, Foremost, CBIZ) — a DP-3 alone won't respond.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
How much does landlord insurance cost?
Roughly 25% more than homeowners insurance on the same property — for a $300K dwelling, typically $1,600–2,600/year in average-risk areas, or about 6–10% of gross annual rent. Multi-unit and high-risk locations price higher.
Does landlord insurance cover tenant damage?
Sudden accidental damage (a kitchen fire) yes; wear-and-tear and intentional damage no — that's what security deposits are for. Vandalism coverage during vacancy often requires a specific endorsement after 30–60 days empty.
Is loss of rent coverage worth it?
Yes — it's usually 1–3% of the premium and pays your rent while the unit is uninhabitable after a covered loss. A fire that takes 6 months to repair on a $2,000 rental is $12,000 of protected income.
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