Landlord Insurance (May 2026)
DP-3 averages $900–$3,000/year — 30–50% more than DP-1 but pays open-peril replacement cost. Includes loss-of-rent coverage. The 3 dwelling-fire policy types decoded.
Standard homeowners insurance does NOT cover rentals
The moment your property becomes a rental (long-term lease or short-term Airbnb), standard HO-3 coverage is typically void. Claims can be denied retroactively. Switch to DP-1/DP-2/DP-3 immediately when you start renting. Failing to do this is the most common insurance mistake new landlords make.
Quick Answer
- Most landlords need: DP-3 — open peril + replacement cost + loss of rent. Industry standard for rental property mortgages.
- Average cost: $900–$3,000/year for a single-family rental. Multi-unit (2-4 unit) properties run 30-60% more.
- DP-1 vs DP-2 vs DP-3:DP-3 is 30-50% more than DP-1 but covers open-peril events (anything not excluded) vs DP-1's 9-named-peril limit.
- Loss of rent coverage: typically 20% of dwelling coverage, up to 12 months. Critical when mortgage payments depend on rent.
- Lender requirement: rental-property mortgages typically require DP-3 — DP-1 and DP-2 may not satisfy the lender.
- Tenant rule: require renters insurance in your lease — $15-$30/mo for them, large protection for you.
- Airbnb: standard DP-3 may not cover dedicated short-term rentals. Need short-term rental endorsement or commercial policy.
DP-1 vs DP-2 vs DP-3 — All 3 Decoded
DP-1 — Basic Form
Best for: Vacant or low-value rentals where premium minimization matters most
Payout basis: Actual Cash Value (ACV) — depreciated
- •Covers 9 named perils only: fire, lightning, internal explosion, smoke, vehicle, aircraft, riot, vandalism, hail/wind (limited)
- •Cheapest dwelling-fire option but narrowest coverage
- •Pays depreciated value, not replacement cost
- •Best for older rentals with lower replacement cost
DP-2 — Broad Form
Best for: Mid-tier rentals with predictable peril exposure
Payout basis: Replacement cost (RCV)
- •Adds 18 named perils total: weight of snow/ice, water damage from plumbing, freezing, falling objects, etc.
- •Replacement cost vs ACV — better claim payout than DP-1
- •Good middle ground for rental properties in stable markets
- •About 15-25% more expensive than DP-1
DP-3 — Special Form
Best for: Most landlords — modern open-peril rental coverage
Payout basis: Replacement cost (RCV)
- •Open peril: covers everything EXCEPT specifically excluded events (flood, earthquake, war, normal wear)
- •Replacement cost coverage on dwelling
- •Includes loss of rent coverage standard (12 months typical)
- •Industry-standard for owner-financed rental property mortgages
- •Typically 30-50% more expensive than DP-1
What Landlord Insurance Actually Covers
Covered (DP-3 standard)
- Building structure (open peril basis)
- Detached structures (garage, shed)
- Loss of rent if uninhabitable (typically 12 months)
- Landlord liability (tenant injury, slip-and-fall)
- Legal defense costs
- Some appliances installed by landlord
NOT covered (need separate policies / endorsements)
- Tenant's personal belongings (renters insurance)
- Floods (need NFIP or private flood)
- Earthquakes (separate earthquake policy)
- Tenant-caused intentional damage (limited)
- Short-term rental as commercial use (need endorsement)
- Owner's contents stored at the property
Which dwelling-fire policy should you pick?
Match your situation:
- You're financing the rental property with a mortgage→ DP-3 (lender almost always requires it)DP-1 and DP-2 frequently fail to satisfy lender requirements. DP-3 is the safe default.
- Older rental, lower-value property, owned outright→ DP-1 or DP-2If you own outright and the rebuild cost is below market value, DP-1 ACV pricing matches the asset's actual loss potential.
- Property in hurricane / wildfire / hail zone→ DP-3 + flood + windstorm endorsementOpen peril + loss of rent matters most when catastrophic events become real claim probabilities.
- Multi-unit (2-4 unit) rental→ DP-3 + landlord liability $300K+Multi-tenant exposure increases liability claim frequency. Higher tier liability matters.
- Dedicated short-term rental (Airbnb business)→ DP-3 + short-term rental endorsement OR commercial STR policyStandard DP-3 may exclude commercial short-term use. Verify with carrier or use specialty STR insurer (Proper, Slice, CBIZ).
- You live in one unit + rent the others (multi-family owner-occupant)→ Owner-Occupied Dwelling Fire (OO-DP-3) — different productYour live-in unit may need owner-occupied coverage; rented units need landlord. Some carriers write hybrid policies.
- Property is between tenants (vacant 30+ days)→ Add vacancy permit endorsementMost DP-3 policies exclude claims after 30 days of vacancy. Vacancy permits cost ~10-25% extra but maintain coverage.
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Frequently Asked Questions
How we verified this
Cost ranges and policy structures verified May 2026 against industry-standard ISO dwelling-fire forms (DP-1, DP-2, DP-3), Hippo's 2026 DP-3 explainer, Steadily's 2026 DP-1 vs DP-3 guide, Heritage Insurance's 2026 dwelling-fire breakdown, Bluefield Group's landlord guide, and TGS Insurance Agency's Texas DP-3 reference. Loss-of-rent coverage standards per ISO HO-form policy language. Premium delta (DP-3 vs DP-1) per industry rate-filing analysis.