The Ultimate Insurance Guide for Rental Property Owners

Whether you own a single duplex or a portfolio of 50 single-family homes, your insurance strategy needs to scale with your business. Here is the advanced guide for serious investors.

We have covered basic Landlord Insurance (DP-3) already. Now, let's talk about portfolio protection, risk management, and saving money across multiple properties.

Master Policies vs. Individual Policies

When you are just starting out, buying individual policies for each house makes sense. But once you hit 5-10 properties, managing renewal dates becomes a nightmare.

Require Renters Insurance (Strictly)

Do not just "suggest" it. Make it a lease requirement.

Why? Because if your tenant starts a kitchen fire, their liability policy pays for your repairs. If they don't have insurance, your policy pays, your premiums go up, and your profitability goes down. Use a service like "Assurant" or "Lemonade" to track compliance automatically.

Liability: Your Biggest Ghost

As a landlord, you are a target. If a tenant's dog bites a mail carrier, you get sued. If a handrail is loose, you get sued.

Layering Protection

1. Base Policy: $500,000 Liability per property.
2. Umbrella Policy: $1M - $5M excess liability over the whole portfolio.
3. LLC Structure: Legal separation of assets (consult an attorney).

Ordinance or Law Coverage

If you own older properties (pre-1980), this is non-negotiable. If a fire destroys 50% of the building, the city might require you to tear down the remaining 50% and rebuild the whole thing to modern code (sprinklers, ADA ramps, new electrical).

Standard insurance only pays for the fire damage. Ordinance or Law Coverage pays for the demolition and code upgrades. Without it, you could be out $100,000+ out of pocket.

Conclusion

Real estate is a wealth-building vehicle, but one lawsuit or uninsured fire can wipe out years of cash flow. Treat insurance as a core operational expense, not an afterthought.

Frequently Asked Questions