Key Takeaways
- A standard HO-3 homeowners policy typically won’t cover claims on a property you rent out. Your insurer can deny the claim and cancel your policy. You need a landlord policy — DP-1, DP-3, or a purpose-built landlord product.
- DP-3 is the right policy for most landlords: open-perils coverage on the dwelling, replacement cost settlement, and fair rental income protection built in. DP-1 is cheaper but pays actual cash value and covers named perils only.
- Fair rental income coverage (sometimes called loss of rents) replaces the rent you’d have collected while a covered claim is being repaired. It doesn’t require a separate endorsement on most DP-3 policies — it’s standard.
- If you’re listing on Airbnb or VRBO, a standard landlord policy probably won’t cover you. Specialist carriers like Proper Insurance and Steadily write explicitly for short-term rentals. Don’t assume your landlord policy extends to transient guests.
- Compare home insurance rates and quotes
If You’re Renting Out a Property on a Standard Homeowners Policy, Stop
This is the version of the warning nobody reads until after the claim is denied. If you’re currently renting out a house, a condo, or even a basement unit and your insurance is a standard HO-3 homeowners policy, your insurer has likely reserved the right to deny any claim that arises while the property was tenant-occupied. Some carriers will retroactively rescind coverage. Some will cancel your policy on the renewal date. A few will do both.
The HO-3 is written for owner-occupied dwellings. The underwriting assumptions, who’s in the house, how the property is maintained, what activities are happening, change when you rent it out. Rental properties have higher claim frequency than owner-occupied homes. Carriers price and underwrite for that difference with a specific product: the landlord policy, most commonly a DP-3 (Dwelling Fire Special Form).
You need that product. Here’s what it covers, what it costs, and who sells it.
DP-1 vs. DP-3: Which Policy Type You Actually Need
Landlord policies are written on a dwelling fire form, not a homeowners form. Two forms matter for most landlords.
DP-1 (Dwelling Fire Basic) is the stripped-down version. It covers a short named-peril list, typically fire, lightning, internal explosion, windstorm, hail, riot, aircraft, vehicles, and smoke. If the loss isn’t caused by a listed peril, it’s not covered. Settlement is usually on actual cash value (ACV), which means depreciation reduces your payout. A 15-year-old kitchen damaged in a fire pays the depreciated value of the kitchen, not what it costs to rebuild it. DP-1 is the cheapest landlord form, but it’s also the form most likely to produce a claim dispute.
DP-3 (Dwelling Fire Special Form) covers the dwelling on an open-perils basis, everything is covered unless it’s specifically excluded. Settlement on the dwelling is replacement cost, not ACV. Fair rental income (lost rent while a covered claim is being repaired) is typically included as standard. DP-3 is the most common landlord policy because it’s the closest structural equivalent to the HO-3 homeowners policy you likely had before renting the property out. For most single-property landlords, DP-3 is the right starting point.
The premium gap between DP-1 and DP-3 is real but not dramatic, expect 15-30% more for the DP-3. On a $1,200 annual DP-1 premium, that’s $180-$360. The difference in claim settlement on a partial roof loss or a kitchen fire is far larger than that delta.
The Six Coverage Components of a Landlord Policy
Dwelling coverage (Coverage A) is the structure itself, walls, roof, floors, built-in appliances, electrical, plumbing, HVAC. This is the number to protect most carefully. It should reflect what it would cost to rebuild the property, not what you paid for it or what it’s worth on the market. Reconstruction costs in most markets have run well ahead of home values since 2021, and underinsured landlords find out at claim time when the dwelling limit doesn’t cover the contractor’s estimate.
Other structures (Coverage B) covers detached garages, fences, sheds, and outbuildings on the property. Typically set at 10% of Coverage A, but you can adjust it. If you have a large detached garage on a rental, make sure B reflects its actual rebuild cost.
Fair rental income (Coverage D equivalent) is the coverage most landlords don’t think about until they need it. If a covered loss makes the property uninhabitable, a fire, a burst pipe, a wind event, fair rental income pays the rent you would have collected during the repair period. It’s not indefinite; most policies cap it at 12 months or the policy limit, whichever comes first. If your rental generates $1,800/month, a three-month repair timeline costs you $5,400 in lost rent. Fair rental income covers that gap.
Personal property (Coverage C) covers your property at the rental, your appliances, your lawn equipment, your furnishings if you’re renting furnished. It does not cover tenant belongings. If the rental is unfurnished and you haven’t left any of your own property there, Coverage C can sometimes be set to zero, reducing premium. If you supply appliances or furnish the unit, set C accordingly.
Liability (Coverage E) is your protection as a landlord. If a tenant or guest is injured on the property and sues you, liability covers defense costs and any judgment up to the policy limit. Standard limits are $100,000 to $300,000. Landlords with meaningful assets should look at umbrella coverage on top, a $1M umbrella typically runs $200-$400 per year and extends across your home and landlord policies.
Medical payments (Coverage F) pays small medical claims (typically $1,000-$5,000) for injuries on your property regardless of fault. It’s a goodwill coverage designed to handle minor incidents without triggering a liability claim.
What Landlord Insurance Does Not Cover
Landlord insurance is not a property management solution. A few gaps worth naming explicitly.
Tenant belongings are not covered. This point cannot be overstated. When a fire destroys a tenant’s furniture, electronics, and clothing, your landlord policy pays to rebuild the structure. The tenant’s losses are their problem unless they have renters insurance. Most landlord attorneys recommend making renters insurance a lease requirement, a typical renters policy runs $15-$25/month, and requiring it protects the tenant, reduces your liability friction, and creates a secondary payer on claims where the tenant caused the loss.
Tenant liability is not your coverage. If your tenant accidentally injures a visitor, that’s the tenant’s liability exposure. Your landlord liability covers your negligence as the property owner, a broken step you failed to repair, a code violation, inadequate lighting. The line between landlord liability and tenant liability can blur in litigation, which is another reason renters insurance on the tenant side matters.
Business income beyond fair rental income is not covered. If you own a commercial property or a mixed-use building, a landlord DP-3 isn’t the right form. Commercial property policies handle business income interruption on a different basis.
Intentional tenant damage is typically excluded. Vandalism by a tenant who knows they’re destroying your property is covered under most DP-3 forms (vandalism is usually an open-perils covered loss). But courts distinguish vandalism from intentional destruction by a tenant who knows the space, and some carriers exclude tenant-caused malicious damage specifically. Check the exclusions.
What It Costs
Landlord insurance runs 15-25% more than standard homeowners insurance for the same property. The spread reflects the higher claim frequency on rental properties, tenants are statistically harder on structures than owners, and landlords often aren’t on-site to catch maintenance issues early.
For a mid-priced home ($250,000-$400,000 dwelling value) in a non-coastal, non-wildfire market, expect $1,500-$2,500 per year for a DP-3. In coastal markets with hurricane or wind exposure, Florida, the Gulf Coast, the Carolinas, add 50-100% or more, and expect percentage-based wind or hurricane deductibles on top. A 2% hurricane deductible on a $350,000 dwelling is $7,000 out of pocket before your carrier pays anything on a wind claim. That’s not a typo.
In high-wildfire-risk California zip codes, the private market has thinned dramatically. State Farm and Allstate have pulled back on new business since 2022 and 2023 respectively. Landlords in affected areas are landing on surplus lines carriers or the California FAIR Plan, which covers fire but excludes liability, theft, and water damage. FAIR Plan as a standalone isn’t sufficient, you need a Difference in Conditions (DIC) policy to fill the gaps. The combined cost can run $4,000-$8,000+ per year for a modestly valued rental in a wildfire-adjacent area.
Deductible selection affects premium meaningfully. Raising from a $1,000 to a $2,500 flat deductible typically saves $200-$400 per year. On a rental property where you’re unlikely to file small claims anyway (small claims affect renewal pricing and can trigger non-renewal), a higher deductible is usually the right call.
Who Writes Landlord Insurance
Most major carriers sell landlord policies. State Farm, Allstate, Farmers, Liberty Mutual, Travelers, and American Family all write DP-3s in most states, though state availability and underwriting appetite vary, especially in catastrophe-exposed markets. Foremost (a Farmers subsidiary) has historically been strong in non-standard and rental property markets. Foremost writes in states and risk profiles where other carriers pull back.
For landlords with multiple properties, package policies consolidate multiple rentals under a single policy with a single renewal date and simplified administration. The underwriting math often improves with volume, carriers like it when you bring them a portfolio rather than one house at a time.
Steadily is worth naming specifically because it’s purpose-built for landlords, including those with Airbnb and VRBO exposure. Steadily underwrites landlord policies with explicit short-term rental provisions in markets where traditional carriers either exclude transient guests or require separate endorsements.
Short-Term Rentals: A Different Risk Entirely
If you’re listing on Airbnb or VRBO, a standard DP-3 landlord policy often won’t cover you. The underwriting logic diverges: short-term rental hosts have transient guests who don’t have the same relationship to the property as a year-lease tenant. Guest injury liability, property damage from high turnover, and the reputational damage of a bad guest are different exposure categories.
Airbnb’s AirCover for Hosts provides some protection, up to $3M in damage and $1M in liability as of recent program terms, but it comes with coverage conditions, claim-dispute processes that don’t involve your own insurer, and gaps that have surprised hosts. It is not a substitute for real insurance.
Specialist carriers have built products for this market. Proper Insurance writes short-term rental policies with explicit guest-liability coverage and contents protection, including for theft by guests. Steadily covers both traditional rental and short-term rental on the same platform. Slice writes on-demand coverage tied to active rental periods. Some traditional carriers, Foremost and CBIZ among them, offer short-term rental endorsements that can extend a landlord policy.
Verify before you list. The policy language on transient guest coverage is specific, and the mismatch between a standard landlord policy and a short-term rental operation is exactly the coverage gap that produces a denied claim.
Reading the Dec Page Before You Sign
When a landlord policy binds, the declarations page tells you what you actually bought. Coverage A is the dwelling. Coverage B is other structures. Coverage C is your personal property on-site. Coverage D equivalent is fair rental income. Coverage E is liability. Coverage F is medical payments.
The number to audit first is Coverage A. That’s the number that has to be sufficient to rebuild the property. Not its market value. Not what you paid for it. What it would cost to rebuild it in current construction cost terms, with current labor and materials. In most markets, that number is meaningfully higher than market value, especially in areas with slow new construction, where contractor capacity is constrained and rebuild costs run $200-$350 per square foot.
I’ve seen landlords come through their first major claim on a rental property expecting a full rebuild settlement and learn, while standing in a gutted house, that their Coverage A was set to the purchase price from seven years ago. The carrier paid to policy limits. The gap between that and what the contractor charged was the landlord’s problem. That’s the conversation I’d rather you have with your agent before the claim, not after.
For a broader look at how carriers handle rental and owner-occupied property, including which best home insurance companies have the strongest landlord underwriting footprint by state, it’s worth doing a side-by-side comparison before you bind.
Multi-Property Landlords: When to Think in Portfolios
The one-policy-per-property approach breaks down as soon as you have four or five rentals. Administration alone becomes a burden, staggered renewal dates, separate billing relationships, inconsistent coverage structures across properties. Package policies let you consolidate under a single policy with a blanket or scheduled structure depending on the carrier.
With a scheduled approach, each property carries its own coverage limit listed in the policy. With blanket coverage, a single aggregate limit covers the portfolio and can be drawn against for any single property loss. Blanket works well when the properties are similar in value; scheduled works better when values diverge significantly.
Carriers that handle portfolio landlord business include Nationwide, Travelers, Farmers, and several regional carriers with commercial lines capability. At five or more properties, the conversation shifts from personal lines to small commercial lines, and the underwriting relationship changes accordingly. A captive agent probably isn’t the right tool. An independent agent who works with multiple carriers and has actual portfolio landlord accounts is where you want to be.
