Most people who become landlords don’t plan on it. They get transferred, get married, inherit a property, or upgrade to a larger home and decide to keep the old one as a rental rather than sell it. That transition happens fast — and the insurance rarely keeps up.
The single most common mistake we see at Options Insurance: the landlord keeps the homeowners policy they already had on the property. It feels like the logical thing to do. The policy is already paid up, it covers the building, and switching feels like extra hassle. But it creates a serious gap — and most people don’t find out until they have a claim.
The short version: A standard homeowners policy covers an owner-occupied residence. Once you move out and begin collecting rent, that policy’s coverage changes — or goes away entirely.
Homeowners policies are written for properties where the insured lives. The moment you rent to a tenant, several important things shift:
The fix is straightforward: replace the homeowners policy with a landlord policy (also called a dwelling fire policy). It’s built for exactly this situation.
A landlord policy covers the physical structure — the building, attached structures, and any systems and fixtures that come with the property. It also includes liability coverage for injuries or property damage that occur on the premises. And critically, it includes a coverage type that homeowners policies don’t offer in the same way: loss of rents.
Loss of rents coverage is the piece most people overlook until they need it. Here’s the scenario: a covered loss — say, a burst pipe or fire — makes your rental unit uninhabitable. Your tenant can’t stay. They move out. The property sits empty for six weeks while it’s being repaired. You’re still making a mortgage payment, but you’re not collecting rent. Without loss of rents coverage, that income gap is entirely on you.
Loss of rents coverage fills that gap. It pays the fair rental value of the property for the period it’s uninhabitable due to a covered loss. It’s not optional if you depend on that rental income to cover your costs.
Most of our landlord clients fall into one of two categories, and the right policy looks a bit different for each.
Accidental landlords — people with one or two rental properties, often single-family homes — typically do well with standard landlord or dwelling fire policies. These are written property by property, they’re straightforward to quote, and they can be layered with a personal umbrella policy for additional liability protection.
Portfolio landlords — people managing four, five, ten, or more units — often benefit from specialized commercial or portfolio policies that cover multiple properties under a single policy with broader terms. These are more complex to underwrite but can be significantly more efficient to manage. If you’re in this category, it’s worth a dedicated conversation rather than stacking individual policies.
One thing to be clear on: your landlord policy does not cover your tenant’s belongings. If your tenant’s couch, TV, and clothing are destroyed in a fire, your policy isn’t going to pay for any of it. That’s their responsibility, and they need their own renters insurance policy to cover it.
Many landlords in Minnesota now require tenants to carry renters insurance as a condition of their lease — and it’s a reasonable thing to ask for. Renters insurance is inexpensive, and it protects both parties. A tenant who doesn’t have it is more likely to look for someone to blame if their belongings are damaged.
No. Standard homeowners policies exclude coverage when a property is regularly rented to tenants. Most carriers will cancel or non-renew the policy once they discover it is being used as a rental. You need a landlord or dwelling fire policy to properly insure a rental property.
Loss of rents — sometimes called rental income coverage — pays you the rent you would have collected while your property is uninhabitable due to a covered loss. If a fire or burst pipe makes your rental unit unlivable and your tenant moves out, this coverage replaces that income during repairs. Without it, you absorb that loss entirely.
Landlord insurance typically costs 15 to 25 percent more than a comparable homeowners policy, because rental properties carry higher liability exposure and different vacancy risks. The exact premium depends on the property type, location, number of units, and coverage limits you choose.
It depends on your arrangement. If you rent out a room or basement while still living in the home, your homeowners policy may still apply — but you should disclose this to your carrier. If you move out and rent the entire property, you need a landlord policy. Your agent can review your specific situation and recommend the right approach.
Standard landlord policies generally don't cover tenant belongings (tenants need their own renters insurance), gradual wear and tear, flood damage (requires a separate NFIP or private flood policy), and earthquake. Vacancy beyond a certain period — often 30 to 60 days — can also trigger exclusions, so properties that sit empty between tenants need to be handled carefully.
I work with a lot of accidental landlords — people who kept a property when they moved and didn’t realize the coverage gap until we talked. Getting the right policy in place before you have a claim is the only time it costs you nothing. If you’re renting a property, give me a call and we’ll make sure you’re actually covered.
Whether you have one rental or a growing portfolio, we’ll find the right coverage — including loss of rents — and make sure you’re not carrying a homeowners policy that won’t pay.
See Landlord Insurance Coverage →