Landlord insurance · Real estate investors
If you're renting out a property, your homeowners policy doesn't cover you. Here's what does.
A homeowners policy voids the moment you rent to a tenant. Most landlords don't know this until a claim is denied. Landlord insurance is a distinct product — and getting the form right is the difference between being covered and being exposed.
Review your rental property coverageThe three most common mistakes landlords make
- Leaving the property on a homeowners policy. An HO-3 policy contains vacancy and tenant exclusions. Once you place a tenant, you may lose coverage for the most common loss types — fire, water damage, liability. Carriers can and do deny claims when they discover the property was being rented under a homeowners policy.
- Buying a DP-1 to save money. A DP-1 (Dwelling Fire, Basic Form) is a named-peril policy — it only covers the specific perils listed, typically fire, lightning, and windstorm. It excludes water damage, vandalism, and most other common losses. The premium savings are real; the coverage gap is larger.
- No loss of rents coverage. If your property is damaged and uninhabitable for three months during repairs, you've lost three months of rental income. Loss of rents coverage — standard on DP-3 policies — reimburses that income. Without it, you absorb it entirely.
Understanding the policy forms
DP-1 · Basic form
Named-peril coverage
Covers only the specific perils listed: fire, lightning, windstorm, and a few others. Significantly cheaper — and significantly more limited. Generally appropriate only for vacant properties or as a last resort.
DP-2 · Broad form
Extended named-peril coverage
Adds perils like falling objects, weight of ice and snow, and water damage from plumbing failures to the DP-1 list. Better than DP-1 but still a named-peril form — if the loss isn't on the list, it's not covered.
DP-3 · Special form
Open-peril coverage
Covers all perils except those specifically excluded — the broadest protection available. The right choice for most single-family and small multi-family rental properties. This is what Trella recommends as a baseline.
Coverage considerations for real estate investors
- Short-term rentals require separate coverage. Airbnb and VRBO occupancies are typically excluded from both homeowners and standard landlord policies. Short-term rental coverage exists but must be specifically arranged — the platform's host guarantee is not insurance.
- LLC-held properties may need a different policy type. If your rental property is held in an LLC, a personal landlord policy may not respond correctly to a claim. This is worth flagging early — we can help you understand what structure makes sense.
- Umbrella coverage for landlords has limits. A personal umbrella typically extends to rental properties you own individually. Beyond a certain number of units or when properties are held in entities, additional coverage structures may be needed. We help you understand where that line is.
- Older properties carry specific underwriting risks. Knob-and-tube wiring, galvanized plumbing, older roofs, and wood-shake roofing create underwriting challenges. Knowing these issues before applying for coverage avoids mid-policy cancellations and claim denials.
Frequently asked questions
Do I need landlord insurance if I only rent out a room?
If you rent out a room in your primary residence, a homeowners policy with a landlord endorsement may be sufficient. If you rent the entire home and live elsewhere, you need a standalone landlord policy. The distinction matters and most standard homeowners policies do not provide adequate coverage for even partial rentals without an endorsement.
Does landlord insurance cover tenant damage?
Tenant-caused intentional damage is typically excluded. Accidental damage caused by tenants — a broken pipe from a tenant's washing machine, for example — may be covered depending on the policy form and specific circumstances. This is one of the more nuanced coverage questions and worth examining policy language directly.
What does loss of rents coverage actually pay?
Loss of rents (also called fair rental value coverage) reimburses you for the rental income you would have received during the period a property is uninhabitable due to a covered loss — while repairs are being made. It typically runs for 12 months and is calculated against your lease rate. It does not pay if you voluntarily leave the property vacant.
I have 6 rental properties. Should they all be on one policy?
Possibly. Whether a single policy or individual policies per property makes more sense depends on how your properties are held, their locations, and your current carrier relationships. This is exactly what a portfolio coverage review would address — and we can point you in the right direction on structure.
Know exactly what your rental properties are — and aren't — covered for.
Bring your current policies or your lease agreements. We'll tell you whether what you have actually works.
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