Landlord insurance can help protect property owners (in insurance, they can often be called “lessors”) who rent or lease their property residentially or commercially. It’s intended to cover risks for landlords who rent out the space, rather than provide protection for the occupants of the rented space.
Landlord insurance typically includes three types of coverage:
- Property coverage — The building itself and structures related to the building.
- Liability coverage — The cost of medical bills for visitors who suffer an injury in the space and related legal claims.
- Business income protection — Lost rent after a covered event, such as a fire or a burst water pipe, that leaves the space uninhabitable temporarily.
What could landlord insurance cover?
Let’s dig in further to understand what could be covered, including some example scenarios risks for landlords who rent out their property to residents and businesses.
1. Property damage
Property damage coverage is usually the foundation of landlord insurance for rental properties. This type of coverage could help repair the building structure if it’s damaged by a covered event such as fire or smoke, vandalism or a natural event like a storm, wind or hail.
Coverage typically includes the building walls, roof and any common areas or shared spaces. It also may cover built-in systems like HVAC or plumbing.
Example of landlord insurance property damage coverage: A grease fire breaks out in a tenant’s restaurant. The fire triggers the sprinkler system, causing fire, smoke and water damage across multiple units.*
The tenant’s own restaurant insurance may cover their equipment, but landlord insurance could help cover repair costs for the walls, ceilings and integrated systems such as air conditioning or ventilation. Without landlord insurance coverage on the property, you, the lessor, could be stuck paying out of pocket to rebuild.
2. Liability protection
Liability insurance coverage could help protect landlords if someone is injured on your property and you’re held responsible (in insurance, we call this bodily injury). This can be a high-risk exposure for landlords, especially in multi-tenant or commercial properties.
Liability insurance could help cover:
- Medical expenses
- Legal defense costs
- Settlements or court judgments
Example of landlord insurance bodily injury coverage: A visitor enters your building and slips on a wet floor in a common area. They get hurt and require medical care. Though they’re not your tenant, you could still be held liable as the property owner. Landlord insurance could help cover some of those costs.
As the property owner, you can be held liable for injuries to visitors and non-tenants — not just your renters — making liability coverage a good idea for any lessor.
3. Loss of rental income
Business income insurance, also called business interruption insurance, is where landlord insurance goes beyond basic property care.
If your property becomes uninhabitable due to a covered loss, such as a fire, burst water pipe or damage from extreme weather, landlord insurance could help cover the rental income you would have earned while your building is uninhabitable, as well as some other operational expenses.
Example of landlord insurance extreme weather damage coverage: A severe storm causes significant roof damage to your property. Tenants are forced to temporarily vacate while the building is being repaired — so you’re out on rent.
Landlord insurance could help replace lost rental income while the property is under construction. For many landlords, this can mean the difference between staying financially stable or taking a major financial hit.
What’s not typically covered by landlord insurance?
Here’s where many policies draw the line on coverage, though you should always check your policies for a full list of exclusions:
- Tenant property. Landlord insurance doesn’t usually cover tenant belongings like furniture, electronics, personal assets or business inventory or any business property owned by tenants who rent a commercial space. Your tenants will need their own renters insurance or business insurance to cover those items.
- Regular wear and tear. Insurance is intended to cover sudden, accidental events, not ongoing issues. As a landlord, you’re responsible for routine upkeep, replacing aging systems and fixing equipment breakdowns caused by time and use. If something like your HVAC system just conks out one day because you haven’t been keeping up with regular maintenance, that cost won’t be covered by landlord insurance.
- Your tenant’s business or operations. Your tenant’s business on your property is their own responsibility. If you lease a commercial space to a business, your policy will not cover that business operation, the tenant’s equipment, the tenant’s inventory or their general liability.
Commercial landlord insurance vs residential landlord insurance
Landlord insurance can cover both commercial and residential properties. Both types of coverage share the same general goal: To protect the building itself, the income it generates, and the landlord’s exposure if something goes wrong. But the risks, terminology and policy structure can differ between them.
Commercial landlord insurance
Landlord insurance for commercial properties is often referred to as lessor’s risk insurance (LRO). This type of insurance can cover buildings like office spaces and retail storefronts where the tenants are businesses rather than individuals. With LRO, the building, including its common areas and shared systems, can be covered, but the tenant is responsible for their own operations, equipment and business liability. Commercial properties tend to carry more variable risk due to factors such as multiple tenants with different business activities and higher foot traffic.
Residential landlord insurance
Landlord insurance for residential properties is for buildings that are rented or leased to individuals or families, such as single-family homes or small, multi-unit buildings.
What type of insurance do landlords need most?
The right landlord insurance coverage depends on your property type, your tenants and how much risk you’re willing to take on. The types of insurance that many landlords consider include:
Business Owner’s Policy (BOP insurance)
Many landlord insurance policies — especially for commercial properties — are written as a Business Owner’s Policy (BOP insurance), which bundles commercial property insurance for the building itself and business income loss with general liability insurance for injuries and legal claims. Bundling helps protect against coverage gaps, and it can be more cost-effective than buying two separate policies.
Despite being a great option for landlords, BOP adoption was the only major coverage type that did not see growth 2023 to 2025, according to a 2025 ERGO NEXT survey of 500 small business owners. This lack of adoption suggests that small business owners — including property owners — may not realize the value of a single bundled policy.
Cyber liability insurance
This type of coverage could help protect landlords who collect and store sensitive tenant information like tenant applications, leases and payment details. Cyber liability insurance could help with coverage for the costs of data breaches, cyber attacks and system failures.
Landlord insurance vs. homeowners insurance
One of the most common mistakes property owners make is to think that homeowners insurance provides sufficient coverage on a rental property. If you rent out a property, your risks change. Homeowners insurance is designed for owner-occupied homes. Landlord insurance is equipped to handle the complexity of residential and commercial rental properties.
If you make the mistake of relying on homeowners insurance, you may not be protected against the costs of tenant-related damage, liability involving tenants or visitors or lost rental income.
How much landlord insurance coverage do you need?
The amount of coverage that a landlord needs depends on a number of factors, including:
- Your property size
- Residential or commercial property
- The type of property you rent
- The number of tenants you have
- The location of your property
- Local weather risks and other hazards
- Vacancy levels in your area
Many landlords look for coverage that can help cover a full rebuild for the cost of the property, liability limits high enough to protect their personal assets and rental income that reflects the actual rent.
To see how much landlord insurance you need in about 10 minutes, start a free, no-obligation quote with ERGO NEXT.
