The Complete Guide To Investment Property Insurance [2025]

Leasing or renting out properties makes a profitable passive income for doctors.

However, they can lose or damage their properties if they don’t protect these assets from uncertainties.

As a result, real estate investors and owners use investment property insurance to protect their properties from loss and damage.

If you’re a doctor considering renting out your property for extra income, this guide provides an overview of investment property insurance, its coverage, price, tips, pros, cons, and more!

What Is Investment Property Insurance?

A rental property insurance or landlord insurance protects properties you rent out to others.

Like homeowners insurance, it helps pay for repairs to man-made or weather-related and accidental damage.

Some landlord insurance also provides liability coverage to help you cover for a tenant’s injury or property damage.

The law doesn’t require property owners to get landlord insurance, but lenders will require you to get insurance if you’re still financing your investment property.

What Does a Rental Property Insurance Cover?

Explore these common landlord insurance coverage options that companies offer, and add them to your policy as needed.

Property Damages

A typical landlord insurance policy primarily provides dwelling coverage, which includes damages to your residence and permanent structures.

Depending on your insurance company or policy, you can also cover structures like the garage and shed.

It covers damages caused by natural disasters (e.g. storms, fires, hail, etc.), negligence, intentional damage, or vandalism.

Ultimately, landlord insurance can help rebuild and repair any damaged structure or item in your property.

Personal Property

You can use landlord insurance to protect your personal property, such as any equipment or appliances you own.

Note that this doesn’t cover tenants’ personal belongings.

Consider getting personal property coverage in your policy if you have a fully-furnished rental property.

Otherwise, you may leave this out if you’re only leasing or renting out an empty residence.

Loss of Use or Rental Income

A rental property insurance policy may cover lost rental income if tenants need to move out temporarily due to damaged property.

Consider adding this to your landlord insurance policy, so you can still collect rent while you rebuild or repair your property.

Liability

The liability coverage in your landlord insurance can help you pay for legal or medical costs if your tenant incurs an injury on your rental property due to your fault or negligence.

For example, a tenant may break their leg because of a broken staircase.

Most policies offer liability insurance coverage.

However, you may increase your liability coverage based on your property size, risk tolerance, and preference.

For example, a one-bedroom condo needs less liability than a two-story house.

Short-Term Rentals

Your landlord insurance may also provide home-sharing coverage if you rent them out short-term or long-term.

Short-term rentals, like Airbnb or stays for less than a month, can receive more protection for liability and personal property with a short-term rental insurance policy.

You can also rely on your homeowners insurance policy to cover short-term rentals if you let your provider know.

However, some providers will require a rental endorsement policy to increase your coverage.

Meanwhile, you need proper rental property insurance or landlord insurance for rentals that last at least six months.

You may also suggest that tenants acquire renters insurance to protect their personal belongings.

Additional Landlord Coverage Options

You can customize your landlord policy for additional coverage.

Depending on the company, here are some options you can include:

• Vacant Property Endorsement: Most landlord insurance policies don’t cover unoccupied properties, even if it’s just 30 to 60 days. Consider adding a vacant property endorsement to protect your property and assets even if it’s not currently rented out.
• Vandalism Endorsement: A landlord insurance policy doesn’t always cover vandalism. It’s recommended to add a vandalism rider if your rental property is in a high-risk location.
• Burglary Endorsement: In case of a burglary, this additional rider in your landlord insurance policy can reimburse stolen maintenance-related equipment, like a lawnmower, or help repair broken doors or windows.
• Building Code Endorsement: If you own old property, it may not comply with local building codes. Getting this additional rider can help with extra costs if you need to rebuild or repair parts of your property to meet new building codes.
• Pet Damage: If your tenant has pets or you allow pets on your property, consider adding this rider to your landlord insurance to protect your property from damages caused by animals. Most policies don’t include this option, so ask your insurance company if they cover it if interested.

Homeowners Insurance Vs Landlord Insurance

Homeowners insurance policy and landlord insurance have many similarities but also two distinct differences.

Some similarities include covering damages to the property’s physical structure and providing liability coverage.

On the other hand, homeowners insurance and rental property insurance differ regarding how they cover personal property.

A homeowners policy typically covers damages to personal items, such as clothes, while landlord insurance doesn’t cover the damaged belongings of your tenants.

However, landlord insurance may cover items or appliances that are part of the rental property.

If your tenant asks for insurance coverage, you may ask them to get renters insurance to protect their belongings.

Besides this, landlord insurance differs from homeowners insurance regarding the loss of income coverage.

Since you’re renting your space or property as an extra source of income, landlord insurance covers the amount of lost rent if the property isn’t available due to damages.

Meanwhile, homeowners insurance only covers your property, assuming that it’s owner-occupied.

It’s highly recommended to get landlord insurance instead of homeowners insurance if you’re renting out your property, to ensure financial and asset protection in the long term.

How Much Does a Landlord Insurance Cost?

Rental property insurance or landlord insurance costs around $2,100 to $4,000 annually.

However, premiums can range from $700 to over $8,300 per year, depending on your location and preferred coverage.

Unlike homeowners insurance, a landlord policy is generally 15% to 25% more expensive.

Insurance companies charge more since renting out a property involves higher risks than having it occupied by the owner, who will usually take better care of the property.

When assessing risks, companies, look at various factors, including natural disasters, property values, crime rates, building age and condition, tenant behavior, state laws and regulations, claims history, and additional coverage options.

Besides this, rental property insurance offers wider liability protection to cover the owner’s medical and legal fees.

To get an exact amount, ask for a quote from insurance carriers.

How to Get a Landlord Policy

Here’s a quick guide to help you find suitable landlord insurance.

• Browse Online: If you don’t know where to start, search for online platforms or companies that offer landlord insurance. Although this is highly convenient, make sure to check the platform’s or company’s legitimacy and credibility before deciding to get a landlord policy online.
• Ask for Quotes from Known Insurance Carriers: You can also approach known companies to find a suitable policy. Some of the best landlord insurance companies include Allstate, American Family, State Farm, Farmers, and Geico.
• Discuss the Packages with an Agent: Take the time to understand and compare the different packages that companies offer. Ask the agent about the policies and let them know of any concerns you might have so they can customize the policy to your needs.
• Review, Sign, and Purchase the Policy: After narrowing down your options, review each one carefully and sign the policy that suits your needs and budget. You may then pay for the insurance monthly or annually, depending on your agreement.

Should You Get a Rental Property Insurance?

Here’s a quick list of the pros and cons of getting rental property insurance.

Pros

• Protects your property’s structure, assets, and items rented to tenants
• Covers liability claims
• Pays for repairs and loss of rental income
• Lets you list the expenses for a property tax deduction
• Gives you more peace of mind

Cons

• Costs more than homeowners insurance
• Adds an extra expense
• Only covers the homeowner’s belongings, not the tenants’
• Need to select the right insurance option as policies vary

If you’re renting out your apartment, condo, or house to others, short-term or long-term, it’s highly recommended to get landlord insurance.

It will protect your rental property and avoid major financial losses due to unforeseen circumstances.

However, if you reside on the property and rent out a room or space, you may get a homeowners policy with a rental property endorsement.

Ultimately, the decision is yours.

Weigh your pros and cons carefully, compare landlord insurance quotes, and choose the right one for your rental property and needs.

Tips When Shopping for a Landlord Insurance

Before you ask for quotes and compare fees and policies, here are a few tips to help you choose the right rental property insurance for your needs.

• Consider the property’s location and possible vulnerability to natural disasters in the area.
• Check the cost of rebuilding your property from scratch and see if a policy can cover it.
• Decide if you will require tenants to get renters insurance. Renters insurance will protect and pay for any of the tenants’ lost or damaged belongings.
• Ask about the policy’s maximum number of months or maximum amount of loss of use to ensure you get the most in case of lost rental income.
• Consider adding safety features before getting insurance to mitigate risks and help lower insurance fees.
• Know and understand the claim process.
• Consider working with a professional agent to find a suitable policy for you and help you understand the details.