Rental property insurance is coverage that landlords purchase in order to protect their home or business structure and shield themselves from liability if someone gets hurt on a property they own. In some respects, this insurance is similar to traditional property insurance, but it also includes several key elements (like liability and loss of income) for added protection.
If you are a homeowner considering renting out your home or you're thinking of buying a rental property, you will need special insurance to protect you. Finding the right coverage at a good price is important and can be complicated depending on the insurance company you are dealing with.
We did extensive research into more than a dozen insurers to assess coverage options, restrictions, and product offerings for all types of rental insurance so you can the best option to fit your needs.
The 6 Best Rental Insurance Providers for 2021
Best Overall: American Modern
American Modern has been in business since 1949 and is headquartered in Cincinnati, Ohio. The company specializes in rental property insurance and has an AM Best financial strength rating of A+ (Superior). American Modern received an above average amount of customer complaints for an insurer of its size, according to the National Association of Insurance Commissioners (NAIC). Rental insurance from American Modern is available in all 50 states.
We chose American Modern as the best overall provider for rental insurance because they can insure rentals as stand-alone properties. The company can also insure short-term rentals or vacant homes and they have many discounts for bundling multiple policies. As rental specialists, they issue policies for national insurers.
The Bottom Line:
- Do not require a primary home policy to provide you with coverage
- They are specialty insurers for rented dwellings
- All-risk coverage is available
- Coverage available for older homes with no age limits
- They insure annual rentals, short-term rentals, multi-unit, manufactured homes, and single-family home rental properties
- Temporary vacancies can be accommodated
American Modern has multiple options when it comes to insuring rental properties. They insure homes with a great range of values and include vacancy for a given period on most plans when you are between tenants. Liability limits vary by state but start at $100,000 and go up to $1,000,000 or more with underwriting approval or review. Discounts for insuring multiple properties or bundling multiple types of insurance are also available.
Among American Modern’s other products, the company offers coverage for sub-standard homes, people with claim frequency issues, motorcycles, snowmobiles, collectible cars, high-value boats, and even pet insurance.
Homes in above-average condition that show pride in ownership and have roofs under 20 years old qualify for all-risk coverage. This is superior to basic fire and extended policy options that many insurers apply to rental properties. Homes must be under 80 years old to qualify (60 in some states). A less expensive option may only include actual cash value instead of replacement cost. Coverage for collapse, water, mold, trees, shrubs, lawns, or vandalism may also be available.
Exclusions: The policy does not typically include coverage for furnishings or additional structures, but these may be added upon request. There is a limit of four units to qualify for all-risk benefits.
American Modern gives you live agent phone support and, depending on your state, you can deal with their call center directly or use your own agent or broker. Policies can be managed online, and claims can be submitted online or by calling a representative.
Best Price for Existing Homeowners: State Farm
State Farm has been in business since 1922 and is the largest writer of property and casualty insurance in the U.S. The company has an AM Best financial strength rating of A (Excellent) and has slightly lower levels of complaints compared to other companies in the market.
We chose State Farm as the provider with the best price for existing homeowners because the company quoted the lowest rental property insurance price during our research. They provided one of the fastest response times of all the companies we reviewed and did so with knowledgeable and friendly service.
The Bottom Line:
- Great price and friendly local broker service
- Won’t write a policy unless you already have homeowners insurance
- They cover older homes that are in good condition
- They do not write short-term rental insurance
- Replacement cost coverage with inflation protection
- Will insure homes, condos, and apartment properties
We requested a quote for a 2,000-square-foot home in California built in 1941 with 100% replacement cost coverage on the building, business liability coverage, and loss-of-rents included. With a policy deductible of $4,500, our estimated premium came out to $616 per year. We do want to note that your quoted price can vary greatly depending on a number of factors. State Farm will give you discounts for things such as home monitoring systems and sprinkler systems.
State Farm offers dwelling coverage, personal property coverage, loss of rents, and liability coverage for rental single-family homes and condos. For apartment properties, the company can assist you with equipment breakdown coverage, tenant move-back expense coverage (in case your tenants must temporarily vacate your property), heating or air conditioning loss reimbursement, data compromise and identity restoration, and ordinance coverage.
Exclusions: Rental policies from State Farm may exclude payout for water damage caused by continuous seepage or leakage of water or steam. They do not cover flood or underground water, earthquake, landslide, or damage caused by birds, insects, or rodents. Vacancy coverage varies by state and is reviewed on a case-by-case basis.
State Farm insurance is available through local agents, so every time you have an issue, there's a contact person who can help you. They make it easy to deal with one local agent for your home, rental property, cars, and life insurance. They also offer online policy management, a mobile app, and the ability to make and track claims online.
Best For Bundling: MetLife
MetLife offers rental insurance coverage in many areas. The company has an AM Best financial strength rating of A+ (Superior) and a Moody’s rating of Aa3 (High Quality). Their NAIC trend report shows above average levels of complaints over the last three years.
We chose MetLife as the best option for bundling coverage because it is one of the only insurers with discounts for any kind of bundling, including home, auto, life insurance, plus discounts for those who have employer-sponsored group insurance with MetLife.
The Bottom Line:
- May require primary home insurance in some states
- Multi-policy discounts including for employer group insurance
- Storm and water back-up coverage available
- Multi-family property insurance is available for up to four units
- They can cover single-family homes rented to others, as well as condos
- No short-term rentals; leases must be annual to qualify
Customers can purchase policies that have higher deductibles to obtain lower premiums. This may be beneficial because making claims may cause premiums to increase, and frequent small claims could prohibit renewal of your policy.
MetLife offers two kinds of rental insurance for landlords: Landlord’s Rented Dwelling Insurance and Landlord’s Rental Condo Insurance. Both offer the following coverage:
- Identity protection services
- Discounts for any bundling across multiple insurance lines
- Medical payments to others up to $1,000
- Personal injury coverage
- Coverage for personal property like tools, appliances, or furniture used by your tenants or kept on the property
- Coverage for additional structures such as a shed or garage
The following optional coverages are also available:
- Extended coverage limits on the building up to 25% more than insured value in case the damage to the building exceeds the actual insured value of the dwelling at the time of loss
- “Coverage A Plus” provides unlimited replacement value to rebuild after a loss if the amount of insurance on the building is not sufficient
Exclusions: Rental insurance from MetLife is only available when your tenants have annual leases; there is no coverage for short-term rentals. Like most insurers, normal wear-and-tear is not covered. Restrictions are state-specific and should be detailed in individual quotes. Vacancy coverage is handled on a case-by-case basis and criteria may vary by state.
MetLife provides customer service through its call center. To make a claim you have to call it in and a claims specialist will be assigned to you within 24 hours.
MetLife's discounts for multiple policy lines are the best in our review and include their home, auto, and life insurance. The largest bundling discount, however, is for customers who are also insured through an employer's MetLife group insurance.
Best for Fixer-Uppers and Customized Policies: Foremost
Foremost is a member of the Farmers Insurance Group of Companies and providers landlord insurance in many states. The company has an AM Best financial strength rating of A (Excellent) and a positive track record with the NAIC, with very few complaints about their homeowner and commercial property policies.
We chose Foremost as the best option for fixer-uppers and custom coverage because of how many perks and coverage options the company offers. It was also one of the few insurers who could insure older homes and fixer-uppers. The company doesn't require landlords to insure their primary home in order to insure the rental property.
The Bottom Line:
- Does not require primary home insurance
- Extended replacement and agreed loss options
- Access to a tenant-screening program by TransUnion
- Can insure multiple properties on one policy
- Available water damage coverage including flood insurance
- Use insurance scoring in rating
- Can insure you if you have credit issues
Foremost policies are highly customizable, from the coverages you choose to the basis of a claims settlement. The company uses insurance scoring in its ratings, which may make it possible to get lower rates if you have a good insurance history (prior insurance with no claims) and a good credit rating.
Foremost can offer insurance on several types of rental properties or rental situations. It can cover single-family homes, multi-family homes, condos, and possibly short-term rentals or host policies depending on which state you are in. Foremost also offers discounts for members of landlord associations or if you use a property management company.
Foremost gives customers three different types of claims settlement:
- Agreed loss: This is not replacement cost, but is a negotiated value that you decide on with insurance company at the time of insuring the property.
- Extended replacement cost with inflation guard: This gives you additional coverage if the insured value at the time of loss ends up being a bit short for reconstruction, or if the value has increased due to inflation.
- Actual cash value: This is the depreciated value of the structure at the time of loss.
Foremost offers liability coverage for landlords in many different amounts. The following optional coverages are also available:
- Loss of use
- Personal property
- Personal injury
- Other structures
- Repair cost
- Water damage from sewers and drains
Exclusions: Foremost policies feature a vacancy allowance time frame, after which landlords can switch from landlord coverage to vacant home insurance. This is an advantage over other rental policies that may have a maximum amount of time allowed before coverage is canceled.
Foremost customers can contact the company by phone or work through a local agent.
Best Regional: Country Financial
Country Financial was founded in 1925. It has an A+ financial strength rating from AM Best and slightly above average customer complaints online. The company provides rental insurance in 19 states, including several coastal states, the South, the West, and the Midwest.
Country Financial is our best regional rental insurance provider because the company offers a core line-up of coverages with great add-ons that we did not see elsewhere. They can insure large, multi-unit properties with high liability limits. However, coverage is only available in certain states.
The Bottom Line:
- Homeowners insurance for eight units or less
- Commercial insurance for more than eight units available
- Long-term and short-term rental coverage available
- Insures against damage to unoccupied dwellings (vacation homes and seasonals)
- Loss assessments from homeowners associations are covered
- Flood insurance available
Country Financial provides liability limits up to $1 million and medical payments up to $25,000. Their Premier Coverage includes all-risk insurance, and their Basic Coverage offers fire, theft, vandalism, and freezing of plumbing. Optional coverages include flood insurance, sump pump failure, back-up of sewer or drain, and mine subsidence.
If you own an apartment building with more than eight units, Country Financial can offer you commercial landlord insurance through three different types of policies: basic, broad, or special coverage.
Exclusions: Flood insurance and coverages like water damage are excluded from Country Financial’s base policy. Items like weight of snow or ice or falling objects may be excluded from the base policy but included as options. Since exclusions vary by state, it is best to speak with the representative in your state to get details, including the timelines for vacancies.
Country Financial offers online account management and an app. They have a 24-hour client service center but also use local agents. You can report claims online or call.
Best for Vacation Home and Host Rental Insurance: Proper
Proper carries short-term rental insurance and specializes in offering coverage for properties that are rented through Airbnb, Vrbo, and others. Policies are underwritten by Lloyds of London. They have an A (Excellent) financial strength rating from AM Best. Proper provides coverages in all 50 states.
We chose Proper as our best option for vacation home and host rental coverage because the company specializes in those types of coverage. The company also performs its own underwriting to ensure that your rental property is safe, which helps protect you and your guests. They offer coverage options we didn’t see available from other providers.
The Bottom Line:
- Peer-to-peer rental and home-sharing specialist
- Includes coverage for bed bugs
- Ordinance coverage is included
- Sinkhole collapse is covered
- No time limits on loss of rental income
- No limit on damage caused by guests
- Five-minute online quote
We quoted a 2,000-square-foot home in California built in 1941 with 100% replacement cost coverage of annual rents of $100,000, personal property of $100,000. The annual premium was reasonable given the strong coverage. However, our quote also included many of the coverages that other insurers restrict, such as:
- By-law coverage (coverage for ordinances) to undamaged parts of the building
- Ordinance coverage $10,000 included with the option to have $50,000 as an add-on
- Sinkhole collapse
Proper offers replacement cost insurance. The company’s policies include coverage for damage caused by guests and theft and vandalism without any specified limit. Pet liability coverage, liquor liability, and extended liability coverage for watercraft, pools, and hot tubs are available as well.
Proper’s standard liability is $2 million in aggregate coverage, but can be increased upon request. Proper asks specific questions that relate to vacation rentals or hosting through Vrbo, Airbnb, or HomeAway, indicating that their product is designed to cover peer-to-peer and vacation rentals.
Some examples of hosting questions include:
- If the location uses a property manager
- If there are events or parties at the location
- If there is a decibel monitoring system
- If there is an automated water shut-off valve
Proper offers service during regular business hours through independent agents and a 24/7 claims phone number if you need to make a claim.
What Is Rental Property Insurance?
Rental property insurance is coverage by an insurance company for a home that is either rented out on a long- or short-term basis. Rental property insurance will typically offer you protection against many risks that come up as a result of your ownership of a dwelling, such as liability claims or damage to the building itself or the property on the premises.
What Does Rental Property Insurance Typically Include?
Rental property insurance normally includes three types of coverage:
- Building and additional structure coverage which covers the insured value of the building, which can be paid out in a claim based on actual cash value, replacement cost, or extended replacement cost basis.
- Personal property protection to cover any items you include with your rental, like furniture and appliances that your tenants will be using. As a landlord, you may want to insure other personal property kept on-premises and used to maintain the property, like a lawnmower, tools, or other equipment.
- Liability coverage to protect you if you get sued by tenants or anyone else due to injury on-premises, claims of negligence, or any other situation arising from your ownership or management of the property as the owner. Liability will also cover the legal costs associated with these types of claims.
Standard rental property insurance will normally include coverage for loss of rental income, personal property used to maintain your rental, damage to furniture or appliances, medical costs in case of tenant injury, and damage caused by tenants.
Examples of other coverages that you can add to a rental policy include:
- Water damage by flood, sewer back-up, or other causes
- Inflation protection
- Extended replacement cost
- All-risk coverage or comprehensive coverage (this may be subject to certain qualifying criteria, like the condition of the property or age of the roof and building)
What Does Rental Property Insurance Typically Exclude?
Rental property insurance may be issued on a named-perils or an all-risk basis, each of which has different limitations and exclusions. For example, if you have a named-perils basic policy, then everything that is not listed as covered will be excluded. If you take an open-perils policy, then everything is covered unless it is excluded, but the list of exclusions may be very long.
While it may be available as an additional coverage, flood insurance is typically excluded from rental insurance. Vacancy is also usually excluded, or there may be a time limit for a vacancy. Some policies will require you to report the vacancy to the insurance company to get a vacancy permit in order for a temporary vacancy to be covered.
Most policies also exclude coverage for:
- Home-sharing or peer-to-peer rentals
- Building code compliance
- Damage to the personal property of the tenants
- Costs of eviction
- Vandalism or theft
Although the coverages we have listed could be excluded from a general policy, you may be able to add them to a policy by endorsement.
What Are the Expected Costs of Rental Property Insurance?
The factors that determine the price of rental insurance include whether you've had prior insurance, your credit score (in some states), discounts you are eligible for, the location of the property, the cost of reconstruction, and type of coverage. The age, condition, and renovation details of the home are also considered.
The average cost of home insurance in the U.S. is about $1,200 per year and the cost of insuring the same home as a rental is usually about 25% more. Prices can vary a lot depending on your state. Different states cary different risk factors. Living closer to the sea or in areas with natural disasters tends to mean higher premiums.
For home-sharing or peer-to-peer services like Airbnb and other home-share arrangements, you can expect higher premiums. In some cases, much higher than what your homeowners insurance charges.
How We Chose the Rental Property Insurance Companies
We contacted over 20 different insurers, agents, and insure-tech providers, online and over the phone to review the options across the country for the best rental insurance. We also researched online reviews, insurance company ratings, financial stability, and customer satisfaction to narrow down our list.
To finalize our 6 Best Rental Property Insurance Providers of 2021, we checked complaints with the NAIC and relative market share. We eliminated insurers who refer customers to third parties to provide quotes and looked for insurers who would be able to work with you through all the stages of managing your rental property. After assessing all these criteria, we came to our top picks to make up the best rental insurance options for you to choose from.
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