Jane Dotson
Landlord insurance is a type of property insurance that protects the owner's financial interests when they rent out their property. It often covers the rental's structure and provides liability coverage for injuries or damages that may occur on the property. Landlord insurance is not cheap – it costs more than regular homeowner’s insurance. Luckily, there are some ways to save money on landlord insurance. For example, paying in full for your policy will save you money because insurers charge an interest rate if you pay monthly. Another way to save money is to increase the deductible on your landlord insurance policy. The deductible is the amount you have to pay yourself before the insurance company covers any claims expenses. Safety measures such as security cameras, efficient lighting systems, alarms, and smoke detectors can also add value to your building profile in the eyes of the insurance company.
| Characteristics | Values |
|---|---|
| Choose the right deductible | A large deductible may be suitable for some landlords, but not for others. Pick a deductible that would be manageable in an emergency but not so high that you would be unable to handle it. |
| Pay annually | Some insurance carriers offer a discount for paying in full. |
| Choose the right insurance carrier | Landlord insurance is more expensive than homeowners' insurance due to lower supply and higher risk. Carriers offering competitive premiums will require above-average rental properties with proper maintenance and safety measures. |
| Minimize claims | Carriers view rental properties as higher risk due to a higher number of claims. Avoid making small claims to prevent premium increases and maintain carrier choice. |
| Increase the deductible | Raising the deductible can help lower premium costs significantly. |
| Shop around | Compare policies and prices from different insurers to find the best deal. |
| Look for discounts | Ask providers about new customer, multi-policy, loyalty, renovation, referral, and group discounts. Inquire about discounts for security systems, smoke detectors, and membership in organizations. |
| Understand coverage | Ensure you only pay for the cover you need. Landlord insurance typically covers items used to service the property, liability for injuries or damages, and rental income loss. Additional riders can cover income loss due to missed rent payments and flood damage. |
| Use a broker | Brokers can help find insurers with lower charges and excesses. |
| Pay in full | Paying monthly incurs interest charges. Paying upfront or in lump sums can reduce costs. |
| Extra security measures | Implementing security measures such as locks, cameras, lighting systems, alarms, and smoke detectors can lead to discounts. |
| Specialist unoccupied insurance | If your property will be empty for extended periods, consider a specialist unoccupied insurance policy to save costs. |
| Self-insure | If you can afford to pay for property damage or repairs yourself, it may be more cost-effective in the long run. |
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What You'll Learn
Shop around for the best deal
Shopping around for the best deal on landlord insurance can be time-consuming, but it is worth the effort. The first step is to consider what you need to be covered in your rental property. A comprehensive landlord insurance policy will typically cover property damage, liability protection, and lost rental income. You may also want to consider add-ons like legal expense coverage or emergency repair services.
Once you know what you need, start by getting price quotes from at least three companies. You can call them directly or access this information on the internet. Be sure to ask about any discounts that may be available, such as new customer, multi-policy, loyalty, renovation, referral, or group discounts. If you've been with your current insurance provider for a while, see if they can offer you a better deal.
When comparing prices, it's important to look beyond the premium cost. Check the small print or contact the company to find out what is covered and what is excluded. For example, does it offer new-for-old replacement of items? Are there limits to how much you can claim? You should also consider the level of customer service the company provides, as you'll be dealing with them in an emergency.
In addition to shopping around for landlord insurance, you may be able to save money by bundling your policies. Many companies that sell homeowners insurance also offer auto insurance and umbrella liability policies. If you buy two or more insurance policies from the same provider, you may receive a discount. However, be sure to compare the combined price with the cost of buying coverages separately to ensure you're getting the best deal.
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Pay annually
Paying annually is one of the most effective ways to save money on landlord insurance. Insurers often charge extra for the convenience of spreading payments over the year, so paying upfront in a single annual instalment can save you money. You can typically expect to save 2-4% on your annual premium by paying in full.
Insurance carriers view clients who pay annually as ideal customers. These clients pay their premiums on time, do not file claims, and keep their policies for a long time. As such, paying annually can be a good strategy to save money on landlord insurance if you can afford it.
Another way to save money on landlord insurance is to increase your deductible. A higher deductible will usually lower your premium, but it is important to choose an amount that you can comfortably afford in case you need to file a claim. You can also save money by bundling multiple policies, such as landlord and auto insurance, with the same insurance provider.
Other ways to save money on landlord insurance include taking advantage of loyalty discounts by staying with the same insurance company for several years, and new property discounts if your rental property is newly built or recently renovated. Maintaining your property well and addressing issues promptly can also help you avoid unnecessary claims.
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Increase your deductible
Increasing your deductible is one of the quickest and easiest ways to save money on landlord insurance. The deductible is the amount you pay out of pocket before your insurance company covers the rest. The most common deductible for any type of building or property is $1,000. By increasing this amount, you can lower your insurance premium. For example, increasing the deductible from $1,000 to $2,500 can reduce your premium by 8% to 10%. If you increase the deductible to $5,000, you could see a reduction of 12% to 15%.
It's important to choose a deductible that is manageable for you. While a higher deductible can result in significant savings, it's crucial to ensure that you can afford to pay the deductible in the event of an emergency. Consider your financial situation and choose a deductible that is slightly outside your comfort zone but still manageable.
Additionally, it's worth noting that not all landlord insurance plans have the same deductibles. Some plans offer higher deductibles, while others have lower ones. The choice between covering more minor costs with a lower premium or opting for a higher premium and lower minor costs depends on individual needs and preferences.
When deciding on the right deductible, it's essential to understand the types of deductibles. Percentage deductibles, for instance, are used for significant events that result in substantial financial losses, such as earthquakes, hurricanes, or windstorms. On the other hand, flat deductibles are typically used for damages like fire or vandalism.
By increasing your deductible, you can take control of your landlord insurance costs and find a balance between coverage and affordability. Remember to review your policy regularly and make adjustments as your financial situation and needs change.
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Avoid making small claims
Landlord insurance policies can be expensive, so it's important to learn how to save money on them. One of the best ways to do this is to avoid making small claims. While insurance is intended to be used for major claims, some landlords use it more as a maintenance plan, which drives premiums up.
One of the most common claims is for water damage caused by leaking and burst pipes. To avoid this, ensure all pipework is properly lagged and remind your tenants to keep the heating on low during cold snaps to prevent water in the pipes from freezing. If they're going away for the winter, ask them to turn off the water supply at the stopcock and run a tap to empty the system.
Another common claim is for theft or malicious damage. To avoid these claims, install security measures such as high-quality locks, alarm systems, and security cameras to deter potential burglars and protect your property from damage. Also, thoroughly vet potential tenants to reduce the risk of issues like malicious damage, unpaid rent, or negligence.
Conducting regular property inspections can help identify potential risks that may not be immediately obvious, like hidden plumbing leaks, electrical issues, or roof damage. Having a reliable team of contractors on hand to perform repairs quickly and efficiently can also help prevent small claims from becoming bigger issues.
Finally, understand your insurance policy. Many landlords mistakenly assume their insurance will cover everything, only to discover that certain events aren't covered when they try to make a claim. Check with your insurer to understand what is and isn't covered, and consider adding extra cover for things like liability insurance or home emergency cover if needed.
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Ask about discounts
Landlord insurance is more expensive than homeowners insurance, so it is important to know how to save money on it. One way to do this is to ask about discounts.
Firstly, if you have more than one property, consider taking out a portfolio landlord policy, which usually gets you a discount. You can also ask about discounts for having home security systems and smoke detectors.
Secondly, if you are a new customer, you may be able to get a discount on your first policy. Ask your insurance provider about any new customer discounts, as well as other discounts such as multi-policy discounts, loyalty discounts, renovation discounts, referral discounts, and group discounts.
Thirdly, you can save money by paying in full for your policy upfront, as insurers charge an interest rate if you pay monthly. If you pay annually, insurance carriers will see you as a positive client who pays premiums on time and does not file claims, and to incentivize this behaviour, many insurance carriers will offer a Pay In Full Discount.
Finally, if your property is going to be unoccupied for a long time, you could save money by getting a specialist unoccupied insurance policy.
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Frequently asked questions
There are a few ways to save money on landlord insurance. Firstly, you can increase your deductible. This is the amount you pay yourself before the insurance company covers any claims expenses. Secondly, you can pay your insurance premium annually, as some insurance carriers offer a discount for this. Thirdly, shop around for the best deal and look out for insurers that offer discounts for new customers, multiple policies, loyalty, renovations, referrals, and groups.
The best landlord insurance will depend on your individual needs. However, a good comprehensive landlord insurance policy will have three core protections: property damage, lost rental income/rental default insurance, and liability protection.
Landlord insurance usually covers the rental's structure and provides liability coverage for injuries or damages that may occur on the premises. It can also cover personal property, such as landscape tools and certain appliances.
