A homeowners policy is written for a home you live in. Once you rent a house to tenants for the longer term, you will usually need a landlord policy, sometimes called a rental dwelling policy. The Insurance Information Institute says landlord policies generally cost about 25% more than a standard homeowners policy, for broader protection: the building, your liability and the rent you lose while the building is repaired. Here are the ten coverages that make one up, and what none of them do.
1. Dwelling
The building itself: walls, roof, floors, built-in systems. Dwelling policies come in basic, broad and special forms, often labelled DP-1, DP-2 and DP-3. The basic and broad forms cover a list of named causes of loss, such as fire and lightning, with a longer list on the broad form. The special form covers the building against any cause not excluded.
Two choices matter most. Insure for what it would cost to rebuild, not the market price: the land under the house is not at risk from fire or wind. And choose replacement cost over actual cash value where you can. The Texas Department of Insurance’s example: on a 10-year-old roof, replacement cost pays for a new roof at today’s price; actual cash value subtracts depreciation first.
2. Other structures
A detached garage, a shed, a fence. Check whether the limit is part of the dwelling limit or on top of it.
3. Your property on site
The appliances, lawn mower, snow blower and other things you leave for maintenance or for the tenant to use. Not the tenant’s things.
4. Loss of rents
Also called fair rental value. It pays the rent you lose while the home is repaired after covered damage.
A kitchen fire on Monday, March 1, 2027, closes a house that rents for $1,800. Repairs take four months. Loss of rents pays $7,200, up to the policy’s limit and time cap.
Pick a limit that covers at least the months a major repair would really take in your area.
5. Premises liability
If a tenant or a guest is hurt on the property and you are responsible, this pays their claim and your legal defense. Match the limit to what you own; a lawsuit reaches for your assets, not just the house.
6. Medical payments to others
Small medical bills for a guest hurt on the property, paid whoever was at fault. It settles minor injuries before they become claims.
7. Umbrella liability
A layer of liability coverage above the property policy and usually your car. Insurers want a set amount of liability underneath first; for a homeowners policy, the Insurance Information Institute puts it at $300,000 before a $1 million umbrella. Ask how rentals count before you buy.
8. Flood
Most homeowners insurance does not cover flood damage, and neither do standard landlord policies. The National Flood Insurance Program covers a residential building for up to $250,000 and contents for up to $100,000, and a new policy usually takes 30 days to start. Private flood policies exist too. Buy before the storm season, not during it.
9. Earthquake
Excluded from standard policies. Where the risk is real, it is a separate policy or an endorsement. The deductible is a percentage, not a flat amount: usually 5% to 15% of the policy limit, according to the Insurance Information Institute. On a $300,000 limit, 10% is $30,000 before the policy pays.
10. Ordinance or law
After a covered loss, building codes can require more than the old house had: new wiring, a wider stair, a sprinkler. The base policy may pay only to restore what was there. Ordinance or law coverage pays the extra to meet today’s code. Older buildings need it most.
Add-ons worth asking about
- Vacancy. Many policies cut or stop some coverage when a home sits empty too long. The Texas Department of Insurance notes insurers may not renew a policy on a home vacant for 60 days or more. Ask about a vacancy endorsement before a long turnover or renovation.
- Water backup. A backed-up sewer or drain is left out of many base policies.
- Equipment breakdown. A failed boiler or central air unit.
- Workers’ compensation. If you employ anyone, even part time, your state’s rules may require it.
- Short-term rentals. Renting by the night is a business activity that many residential policies do not cover. It needs its own policy or endorsement.
What no landlord policy covers
- Your tenants’ belongings. They need their own renters policy, and your lease can require one; the guide to renters insurance explains what it covers.
- Wear, maintenance and pests. A worn-out water heater is a repair, not a claim. The warranty of habitability makes those repairs your job either way.
- Rent a tenant simply does not pay. Loss of rents answers covered damage, not a default. Screening and the security deposit are your protection there.
Where insurance sits in your numbers
Insurance is an operating expense, so it comes out of net operating income before the mortgage.
A single-family rental earns $1,800 a month. Allow 5% vacancy, and pay $260 a month in property tax, $175 in insurance and $180 in repairs.
Rent $21,600 − vacancy $1,080 = $20,520. Expenses $3,120 + $2,100 + $2,160 = $7,380. NOI = $13,140.
Add a flood policy and an umbrella at an example $1,000 a year, and NOI falls to $12,140.
The NOI calculator runs the first case line by line. On a $210,000 purchase, the cap rate calculator shows the cap rate moving from 6.26% to 5.78%. That is the price of the coverage, and whether it is worth paying depends on the risk. Skipping flood coverage to lift a cap rate is a bet, not a return. The guide to what landlord insurance costs goes line by line through the premium.
Buying it
Tell the insurer the home is rented. Compare quotes with the same forms, limits and deductibles, and review the dwelling limit every year as building costs change. Premiums are a deductible rental expense under IRS Publication 527; a premium paid for more than one year in advance is deducted one year at a time.
This is general information, not insurance or legal advice. The policy wording decides what is covered, so read the declarations page and the exclusions before you need them.
Questions people ask
Do I need landlord insurance, or is homeowners insurance enough?
If you rent the home to tenants for the longer term, you will usually need a landlord or rental dwelling policy; a homeowners policy is written for a home you live in. Tell your insurer the home is rented. An undisclosed rental can put a claim at risk.
Does landlord insurance cover my tenant’s belongings?
No. A landlord policy covers the building, your own property kept there, lost rent after covered damage and your liability. Tenants insure their belongings with a renters policy, which many landlords require in the lease.
Does landlord insurance cover flood damage?
Standard policies do not. Flood coverage is bought separately, from the National Flood Insurance Program or a private insurer. An NFIP policy covers a residential building for up to $250,000 and contents for up to $100,000, and usually starts 30 days after purchase.
Written by LoomLease editors. Published September 30, 2026. Plain English, not legal, tax or financial advice: your lease, your state’s law and a professional who knows your situation decide what applies.