Between 2013 and 2017, the average cost of a homeowners insurance claim due to damage from fire or lightning was over $68,000. With such large potential liabilities resulting from damage to rental properties, it’s critical for landlords to purchase appropriate coverage for their investment property—even if their tenants have separate renters’ insurance.
To help landlords find the right coverage, we looked at 25 top national insurance carriers and brokerage firms before settling on the five best. We assessed insurers based on their availability, coverage, pricing options, and transparency to build our list of the best rental property insurance companies.
The 5 Best Rental Property Insurance Companies
Fast agent response time
Excellent financial rating
Coverage available nationwide
Discount for bundling home and auto
Agents currently can’t write insurance across state lines
Property owners are forced to insure property for replacement cost
State Farm was founded in 1922 and has an A rating for financial stability from AM Best. The largest property insurer in the U.S., State Farm is ranked #36 on the 2020 Fortune 500 list of largest companies. The company is headquartered in Illinois and offers landlord insurance nationwide through its network of agents. However, agents are only able to insure properties in the state where the agent’s office is located.
Landlord insurance from State Farm is priced based on property replacement cost, liability limits, and landlord deductibles. All other coverage is automatically included as a percentage of the dwelling coverage—such as other structures and loss of rental income. State Farm also covers vacancies if they result from a covered peril such as fire or some other form of physical damage to the property.
State Farm does not cover loss of rent due to things like local government prohibitions against using property for short-term rental. Other common perils not covered by the basic rental dwelling policy include damage caused by flooding and earthquakes (earthquake coverage is available as an optional endorsement and flood insurance can be purchased through the National Flood Insurance Program). State Farm’s rental property insurance also doesn’t cover loss of your rental due to the inability to pay your mortgage as the result of a disability or death, although this can also be covered through separate insurance from the company.
Why we chose it: We chose State Farm as our best overall rental property insurance provider because the company offers coverage for landlords looking to protect their investment property up to its replacement cost. They also have a nationwide network of agents and offer substantial discounts for landlords that bundle rental property insurance with home and auto policies.
24-hour claims assistance
Insure property for replacement cost, purchase price, or another amount
Personal property and rental value must be added
Liberty Mutual gets the nod for best claims because of its fast response times and 24/7 claims center. While most rental property policies purchased from Liberty Mutual protect up to the replacement cost, the company also lets landlords insure properties for the purchase price or some other stated amount (unlike most competitors).
Liberty Mutual was founded in 1912 and has an A+ rating with the BBB, having been accredited since 1931. Like State Farm, the company provides coverage through a nationwide network of captive agents who are extremely responsive. When we contacted Liberty Mutual for details about their coverage, we got a response within 24 hours from a regional representative who was very forthcoming with details.
Rental property insurance from Liberty Mutual covers both the physical property and landlord liability for the premises. Additionally, landlords have the option of adding coverage for personal property, rental value, inflation protection, or umbrella coverage to their policies. Like other providers, flood insurance isn’t included unless landlords specifically add coverage, which often means getting a secondary policy through the National Flood Insurance Program.
Why we chose it: Liberty Mutual has developed user-friendly processes making it easy for consumers to process claims quickly.
No minimum cost
Policies include nominal personal property coverage
Insurance covers loss of use
Coverage must be based on replacement cost
GEICO outsources rental property insurance
GEICO was founded in 1936 in Fort Worth, Texas, and has an A+ rating from BBB. While the company also has an A++ (Superior) rating from AM Best, this doesn’t matter for rental property insurance policyholders because GEICO doesn’t offer landlord coverage directly. Instead, the company serves as an agency to help place landlord coverage with a network of partner carriers based on individual landlord needs.
Through its network, GEICO offers rental property insurance in most states, depending on the location of the property. Every policy is written based on the replacement cost of the home and its location and includes both the dwelling and any other structures on the property. (Policies may be subject to minimum and maximum coverage amounts for personal property or liability.) Policies also cover loss of use—the value of the loss of rent due to a covered peril such as fire. Vacancies during tenant turnover are not covered and standard exclusions are earthquake, natural flooding, and sewer line backup.
Why we chose it: We named GEICO our best value because, of all the rental insurance companies we researched, GEICO was the only one that had no required minimum cost—customers can purchase policies with no coverage or premium limits. The company only provides coverage based on the replacement cost of a property.
Coverage designed to meet the needs of servicemembers, reservists, veterans, and their families
Insure up to 10 properties with one policy
Must be a member to get coverage
Must qualify for membership before applying
Poor response time
USAA was founded in 1922 in San Antonio, Texas, by a group of Army officers who were having trouble finding carriers to insure their cars. Since then, the company has grown into one of the largest member-owned financial services companies in the world and now offers banking and investment services in addition to insurance and annuities to servicemembers, veterans, and their families.
While USAA provides rental property insurance to landlords who qualify for membership, very few details about their coverage are publicly available. We were able to confirm that landlords can insure up to 10 rentals with a single policy and get coverage for both the property itself, lost rental income for covered events, and personal liability. Landlords can also get custom home-sharing coverage if they only want to rent out a part of their primary residence. Those who want more information about rental property coverage from USAA will need to apply for membership and submit details about their property in order to get a custom quote.
Why we chose it: We chose USAA as our best option for military servicemembers and their families because, as a member-owned company, USAA’s offerings are uniquely designed to meet the specific needs of active members of the U.S. armed forces, reservists, veterans, and their families. For example, many of USAA’s insurance products include endorsements to cover premiums for deployed service members or those injured while on active duty.
Nationwide network of carriers to meet individual landlord needs
Independent agents who can quote multiple carriers to get the best deal
Safety, bundling, group, and loyalty discounts available
Military discounts also available
Doesn’t provide coverage directly
Income protection not included
Trusted Choice is a national nonprofit insurance agency that was founded in 2001. The company is funded by its partner-carriers and has the sole mission of making information available about different types of coverage, their benefits, and costs.
Using Trusted Choice, landlords can get quotes from more than 50 top insurance carriers from around the country with just a single application. Rental property coverage, cost, and claims processes vary based on which provider you choose, but policies typically protect the dwelling itself and landlord liability in the case of accidents or injuries, as well as umbrella coverage. Income protection is also available as an add-on. With Trusted Choice, landlords can also add other coverage like workers’ compensation, inland marine, and flood insurance, depending on their specific needs.
Why we chose it: Trusted Choice is our best brokerage option because the company has a nationwide network of independent agents that can help landlords find policies from multiple carriers—this helps find the exact coverage to fit specific needs and budgets. This is in contrast to most of the others on the list that are insurance carriers who directly underwrite and service policies.
What Is Rental Property Insurance?
Rental property insurance, or landlord insurance, is very similar to traditional homeowner’s insurance, but with some key differences. Rental property insurance protects the property itself—typically up to its replacement cost but sometimes up to the purchase price or some other predetermined value. Insurance also usually protects the critical systems in a house, such as electrical, mechanical, and sewer, if they become damaged due to an accident.
Most policies even include some personal property protection. However, because renting property is a business, rental property insurance also includes some coverage that isn’t standard in normal homeowner’s insurance. Most notably, landlord insurance protects landlords against loss of use of their property due to a covered event. After all, if a tree falls on your investment property, your renters will need somewhere to go. If they have a lease, then you have an obligation to supply them with suitable housing. Without rental property insurance, you could end up paying for them to stay in a hotel or an Airbnb for the duration of their lease.
If you have a mortgage on your rental property, your mortgage lender will likely require you to get landlord insurance. Even if your tenants get renter’s insurance, there are still some things that you’ll be liable for. Damage due to things like electrical fires can be a big source of liability for landlords, especially if a tenant gets hurt as a result.
What Does Rental Property Insurance Typically Include?
What is covered by rental property insurance varies greatly by the type of property being insured, its location, and claims history. However, most policies cover the property itself, personal injury to tenants or their guests deemed the landlord’s fault, and personal property to a small degree. Coverage usually comes with several stated limits, including:
- Property protection: Typically the calculated replacement cost or cash value
- General liability: Usually two to four times the property coverage limit to protect against things like personal injuries
- Personal property: Usually a nominal value to cover things like appliances or landlord equipment stored on-site
When landlords are choosing coverage limits for their rental property insurance, most choose to insure a property up to its replacement cost—the cost they would have to pay to replace the home if it burned down, for example. However, some insurance companies allow landlords to insure their property up to the purchase price (which may be higher or lower than the replacement cost) or some other stated value.
No matter how much coverage landlords choose, insurance companies will not pay landlords more than the value of the damage done to a property in a covered event.
What Does Rental Property Insurance Typically Exclude?
Rental property insurance is important for landlords, even if their tenants have renter’s insurance. And, while landlord insurance covers many things, there are some items that aren’t included. Title insurance, for example, isn’t covered in a policy. Landlords also aren’t protected in the event of malfeasance or negligence—if, for example, there’s a fire at their property due to an issue that they were aware of and failed to fix.
Rental property insurance also doesn’t cover the holding costs of a property that’s sitting vacant, except in cases where a covered event occurs (a tree falls on the house, for example). If landlords simply don’t bother to find a new tenant after one moves out, their insurance isn’t going to pay the lost rental income.
Most rental property insurance policies also don’t include coverage for damages resulting from natural disasters (such as floods or hurricanes) unless landlords specifically opt for those additional coverages (at an added cost).
What Are the Expected Costs of Rental Property Insurance?
Rental property insurance costs depend on the type of property being insured (house, condo, multi-family, long-term, or Airbnb) as well as the location, right down to a specific address. Insurers also consider factors like whether a property is in a flood zone, whether the landlord has filed any claims recently, and even the insurer’s appetite to insure a property in a particular area.
Some insurers will even check a landlord’s credit before binding coverage. Landlords can typically expect their annual rental property insurance to cost about 25% more than a traditional homeowner’s policy each year—depending on coverage limits, personal liability protections, location, and other add-ons.
Is Paying for Rental Property Insurance Worth It?
If you have a house that you’re going to rent to tenants, you absolutely need to get landlord insurance. If you have a mortgage on the property, it’s probably even required. Failing to secure a policy can leave you on the hook for significant liabilities, ranging into the hundreds of thousands of dollars if something happens.
If you don’t have insurance, you may be faced with having to pay to repair or rebuild the property yourself. If you have leased the property to tenants when something happens, you may also be responsible for paying for their housing somewhere else while you make repairs. If one of your tenants gets hurt on the property and it’s your fault, you can even be held responsible for their medical bills and lost wages.
How to File a Claim
The process for filing a rental property insurance claim is a little bit different with each insurer. In many cases, the process can depend on whether your carrier has an adjuster in your area or if they outsource their claims to contractors. Typically, when something happens and you need to file a landlord insurance claim, the process goes something like this:
- Mitigate the damage: If something happens that causes damage to your house, you need to take steps to stop any further damage. For example, if water is flooding into the house, do what you can to stop it so no additional damage occurs.
- Notify the insurer: This may require a phone call or completing an online form; do it as soon as possible once you’ve decided to file a claim.
- Document the damage: Your insurer may require you to provide pictures of the damage as well as the area surrounding the property before any clean-up so they can assess the cause of the damage.
Some landlord insurance companies have mobile apps that you can use to file a claim and/or submit pictures, while others require physical paperwork to document a claim. When you buy coverage, your specific claims process will be detailed in your policy documents. It’s important to read this information carefully so you know what to do if disaster strikes.
How We Chose the Best Rental Property Insurance Companies
We looked for companies that provide coverage in many areas, if not nationally. We focused primarily on large, reputable companies with sound financials, and gave preference to companies that make clear what is included in their coverage (so landlords know exactly what to expect from their insurance).
We also reached out to both agents and carriers and gauged their response time and willingness to share details about the policies they offer. In total, we looked at over two dozen top insurance carriers and brokerage firms before coming up with our list of the five best rental property insurance companies.
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Trusted Choice. "All the Answers on Landlord Insurance Discounts." Accessed December 26, 2020.
Insurance Information Institute. "Facts + Statistics: Homeowners and Renters Insurance." Accessed December 26, 2020.