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Rental property insurance is a type of insurance for properties that are rented to long-term tenants and focuses on the property component of the landlord-tenant relationship. It can be used to cover condos, single-family homes, multi-unit properties, apartment buildings, commercial properties, and more. Homeowners insurance does not cover rental properties.
A rental property insurance policy should include certain things like property damage protection, loss of rental income, and liability coverage. Some companies let you customize your policy in terms of coverage type, amount, and if you want to add anything extra like coverage for the landlord’s belongings that are kept on the property. Keep reading to determine which rental property insurance is right for you.
Best Overall: State Farm
Why We Chose It: A reputable company in business for almost 100 years, State Farm offers comprehensive rental property insurance that is customizable and includes extra coverage that other companies don’t offer.
You can customize your policy
Policies offered nationwide
Add ons offered include data compromise and identity restoration
No online quotes for rental property insurance
State Farm was founded in 1922 in Illinois by a retired farmer with the goal of providing farmers with competitively priced automobile insurance. The company’s vision is to be a good neighbor and it still focuses on that vision and maintains its headquarters in Illinois. Today it offers auto, home, and life insurance. It maintains positive customer reviews and an A++ rating from AM Best.
In addition, the company also offers specialty types of insurance including rental property insurance, life insurance, and pet medical insurance. It insures more cars and homes than any other company. You can get a quote online for some policies, but a rental property insurance policy requires a phone call to an agent to go over coverage options. Discounts are given for bundling insurance policies.
State Farm’s rental property insurance policies include comprehensive general liability, loss of income, and building property protection. It also includes some additional coverage that not all companies offer—equipment breakdown, tenant move back expenses, and heating or air conditioning loss reimbursement. Additionally, you can customize your policy and add on identity theft protection and ordinance or law protection.
Best for Multiple Properties: Foremost
Why We Chose It: Custom policies are offered for your entire rental property portfolio. Coverage is available in all 50 states and the company specializes in rental property insurance.
Lots of coverage options including loss of rents and personal injury
Over 60 years of insurance industry experience
Additional enhancements offered in a platinum package for landlords
No upfront estimates for policy costs
Coverage options vary by state
Foremost was founded in 1952 as a specialty insurance company designed to provide insurance to a growing group of mobile home owners. The company’s focus remains on specialty insurance products, including rental property insurance, vacant home insurance, condominium, and collectible auto insurance, among others. It offers flexible insurance options to over 3 million policyholders nationwide.
You can get an online quote for rental property insurance, but it’s best to speak to a representative about what you specifically need in a policy. The website features an online learning center that has helpful tips and blogs on a variety of topics as well as a claims comparison chart to see how their rental property insurance compares with other companies.
Rental property insurance at Foremost includes the basics of liability, property damage, and loss of income, as well as optional replacement costs, named peril coverage, repair costs, and water damage from sewers and drains. All of your properties can be written on one policy, which streamlines the insurance process and makes it easier to keep track of coverage limits and documents. Discounts are given for using a property manager and belonging to a landlord association.
Best for Discounts: Allstate
Why We Chose It: Allstate offers bundling discounts of up to 25 percent for rental property insurance combined with other policies. Your policy also comes with a dedicated agent.
Dedicated agent who knows your rental properties
No online rental property insurance quotes
Website is less detailed about specific coverage than some other companies
Founded in 1931 and based in Northbrook, Illinois, Allstate is the nation’s largest publicly held personal lines insurer. It was started by the President of Sears, Roebuck & Co. as an auto insurance company, and insurance was initially sold by mail. Allstate has an A+ rating with AM Best.
Today, Allstate offers home, auto, life, motorcycle, renters, business, and rental property insurance, as well as retirement and investment products. In order to get a quote for rental property insurance, you need to contact a local agent who will then work with you for the duration of your policy. This is part of Allstate’s focus on personal customer service.
Rental property insurance at Allstate includes coverage for dwellings and other structures on the property such as garages, as well as fair rental income, medical protection, and liability coverage. You can choose to add flood insurance and umbrella coverage as well. In addition to bundling discounts, Allstate offers discounts for autopay and additional discounts specifically for landlords.
Best for Commercial Properties: Nationwide
Why We Chose It: Nationwide offers comprehensive insurance specifically for commercial rental properties. It’s available in all 50 states and includes custom options.
Offers help determining business property value
Dedicated insurance agent
Custom rental property insurance policies
No online quotes
Discounts not offered upfront
Founded in 1926 in Columbus, Ohio, Nationwide’s roots are in the farm bureau. The company started out selling automobile insurance to local Ohio farmers. It later branched out to farmers in several other states and then to also selling fire and life insurance. Its headquarters are still located in Ohio, but it also has offices in all 50 states.
Auto insurance, homeowners, renters, business, and rental property insurance are all offered by Nationwide, as well as banking and retirement services. Nationwide provides online quotes for some of its policies, but you need to contact a dedicated agent for rental property insurance policies who will discuss coverage options, potential discounts, and business valuations.
Commercial property insurance is used to cover a mixed-use or commercial rental property. Weather-related losses, theft, vandalism, and business income protection are included in the policies. Your building, outdoor sign, equipment, furniture, and inventory are some of the covered items. Commercial property insurance plans pay for losses based on the replacement cost of the item or its actual cash value. Your agent will help you determine those values.
Having rental property insurance is important to protect yourself, your property, and your business from potential property damage and liability. Types of coverage, customization options, and available discounts vary by company. You'll want to choose a company that offers the coverage you need, is easily accessible, offers competitive pricing, and lets you customize your policy.
We recommend State Farm as our best overall rental property insurance. Its coverage options are comprehensive and can be customized, and the company offers unique things like coverage if your tenants have to move out and then move back in. Combine all of State Farm's policy options with its solid reputation and long history in the insurance industry and it’s easy to see why it’s a frontrunner.
Frequently Asked Questions
What Is Rental Property Insurance?
Rental property insurance is a type of property insurance specifically designed for landlords and real estate investors who rent out their properties. Its purpose is to protect the property owner from as much financial loss as possible. Coverage typically includes property damage, liability, and loss of income.
It’s different from homeowners insurance because once you rent out your property, it’s considered a business, and homeowners insurance won’t cover the rental property. You can purchase a rental property insurance policy online or over the phone and most companies let you customize the policy to fit your needs. You may need extra coverage if you rent out a furnished unit or if you have a garage or swimming pool on your property.
How Is Rental Property Insurance Different From Landlord Insurance?
Rental property insurance and landlord insurance are both designed for landlords who have long-term tenants on property they own. However, there are some differences. Rental property insurance focuses on protecting the property, so it includes property coverage with protection for the building. It may also include coverage for additional structures and personal property belonging to the landlord. Landlord insurance, on the other hand, focuses on the business liability component of coverage. This means that landlord insurance protects the property owner from potential claims and lawsuits resulting from incidents that take place on the property such as bodily injury or medical payment claims.
Is Rental Property Insurance Required?
Rental property insurance is not required if you own the property outright and don’t have a mortgage. However, if you live in a condo building or homeowners association the bylaws may require that you have a policy that exceeds the master condo insurance policy. Also, keep in mind that if you have homeowners insurance and decide to rent out the property, the homeowners insurance will no longer cover it.
Rental property insurance is typically required if you obtain a mortgage to purchase a rental property. Your lienholder will require it to protect itself from possible property damage and/or liability. Even if it’s not required in your particular situation, it’s advisable to get rental property insurance because it will save you money, time, and stress in the long run.
Is Rental Property Insurance More Expensive Than Homeowners Insurance?
As is the case with any insurance policy, rental property insurance rates vary based on a number of factors, including the property location, property value, type of coverage, and amount of coverage. It can also be higher if you have had previous insurance claims or live in a flood zone.
Typically, rental property insurance is more expensive than homeowners insurance. Insurance companies classify rental properties as a higher risk than personal residences, and to insure against this risk they raise the premiums on the policies. There is no set amount that a rental property policy will be, but expect to pay at least 20 percent 30 percent more than a homeowners insurance policy.
How We Chose the Best Rental Property Insurance
We reviewed more than a dozen companies that offer rental property insurance before narrowing down our list. The businesses that made our list all have years of experience, positive reputations, and satisfied customers. They also offer coverage in all 50 states. We reviewed the best rental property insurance based on types of coverage offered, add-ons and customizations that are available, and discounts.