What is Rental Property Insurance?

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If you have one or more rental properties, you may need home insurance.

Here’s what rental home insurance is, what it covers and whether or not you need it.

What is Rental Property Insurance?

Renter’s insurance, also known as homeowner’s insurance, covers risks that may arise as a result of renting your property (house, apartment, condo, etc.) to others. It can provide you with financial protection if your property is damaged, or someone is injured on your property.

Depending on the policy you purchase, rental property insurance may also protect your rental income if the property becomes uninhabitable due to a problem covered by your policy.

If you’re considering renting out your property, it’s important to check to see what, if any, coverage is available from your homeowner’s insurance.

What Does Rental Property Insurance Cover?

Rental property insurance usually includes the following items.

Need for housing

This protects against damage to the home due to issues listed in your policy, such as wind, fire and hail.

Importance of debt

Collateral protection protects you financially if you are found to owe someone else’s medical bills or property damage related to the rental property. It will also provide your legal defense if you are sued, up to the limits of your defense.

Personal property

If you have property on the premises that the business may use, such as electrical appliances or lawnmowers, they may be covered by renter’s insurance. Some insurance companies offer this as an optional service.

Loss of loan amount

If you can’t rent your property for a while because of a loss due to a problem in your policy, such as a fire, the lost money can be paid. This is also offered as an optional service by some insurance companies.

What Does Rental Property Insurance Not Cover?

Some costs will not be covered by rental property insurance.

Property of Tenant

If your guest’s property is damaged, it is not covered by home insurance. Homeowners need their own insurance to cover their expenses.

Repair or equipment failure

Things sometimes break. But if the hot water heater in one of the rentals dies, you’ll have to pay out of pocket to have it repaired or replaced.

Shared property

Sharing a home, such as renting a bedroom or floor in your home, is often not covered by renters insurance. Homeowners insurance is designed for properties that are not owned by the owner.

Flood or earthquake damage

These disasters require their own insurance.

If you live in an area prone to such natural disasters and rent out your main home, you may already have earthquake insurance or flood insurance for your home.

Optional Rental Property Insurance

Some items are not covered by home insurance, but can be added to your homeowner’s insurance, such as:

Destroying things

If your property is intentionally damaged or destroyed, the damage is usually not covered by your property insurance policy. Some insurers offer breakdown cover as an optional extra.


Rental property insurance can cover damage to your property in the event of a break-in, but it usually doesn’t cover theft. You can add extras for landscaping – such as a lawnmower or technology – at an additional cost.

Property is under construction

If your house is under construction, you can buy special cover for the house until it is ready for renters.

Building signs

If you need to renovate the property, you may need to make some changes to comply with new building codes. Sometimes you can buy help to get you back for what you’re going through.

Personal injury

This coverage can help you if you are sued for wrongful termination.

Do I Need Insurance for My Rental Property?

Short term rental insurance

If you only rent your first home from time to time, you may not need home insurance.

For example, maybe you take a few weekend vacations a year and rent your first home during that time. In this case, your homeowner’s insurance may cover you if your home is damaged while you are away. This is because homeowner’s insurance is sometimes a short-term rental policy.

Ask your landlord’s insurance company if the rental is covered, as each policy is different. You may need to add an insurance rider to make sure you have enough coverage.

If you rent out your first home frequently, however, it is often considered a business and not covered by homeowner’s insurance.

In this case, look into home sharing insurance.

Long term rental insurance

If you rent your property for a long period of time, such as for several months or years, you may need rental property insurance to protect yourself from possible loss of income.

How Much Does Homeowner’s Insurance Cost?

The Insurance Information Institute reports that rental property insurance is about 25% more expensive than standard homeowner’s insurance.

A recent Forbes Advisor study found that the average cost of homeowner’s insurance is $1,854 per year for a $300,000 home and $100,000 in mortgage coverage. This would make the renter’s home insurance cost $2,318 per year.

As with any insurance policy, the best way to find affordable rental car insurance is to shop around. Compare quotes from multiple insurers before making a decision.

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