Insurance for Rental Property Owners

With the rise of websites like AirBnB, VRBO and more, Rental property insurance is becoming more important than ever. Rental property insurance, not to be confused with renters insurance, offers coverage to landlords of rental properties. It provides insurance to protect the structures on the property, liability for incidents that occur on the premises, the owner's personal content that exists on the property, and more.

What Coverage Should You Have on a Rental Property?

Owners of rental properties face all kinds of risks. Not only are they allowing people access to their personal property, they also face the upkeep on a second, third (or more) properties. Its imperative that landlords have adequate insurance to cover a host of risks they face.

Dwelling: This is coverage to protect the property from physical damage from renters, or physical damage from fires, storms, etc.

Contents and Personal Property: This provides protection for personal property the landlord keeps on the rental property. It does NOT provide protection for property any renters may bring onto the premises.

Liability: This protects the landlord from injuries that may occur to renters while on their property. It provides coverage for medical bills, legal costs in the event of a lawsuit, and more.

Loss of Income: Similar to business income, this type of coverage can provide income if a landlord is unable to rent their property due to some type of covered loss.

What Types of Policies Exist?

Much like homeowners insurance, there are several types of Rental Property Policies that exist. The most basic type of policy is the DP-1 form. It provides the cheapest coverage because it only provides coverage for perils explicitly named in the policy. This means if something damages the property and is not named outright in the policy, there is no coverage. It also covers damage on an Actual Cash Value (ACV), which means it will only replace the cost of the dwelling plus depreciation.

The second type of policy is the DP-2, which gives slightly more coverage than the DP-1. It covers more named perils, but also provides coverage for things like theft. This policy is more attractive as it will restore property on a Replacement Cost basis, which means it will pay for the cost of restoration.

The third type of policy, the DP-3, is the most comprehensive. It provides coverage for a broad range of perils, with only a few exclusions. It also provides Replacement Cost.