Insurance for Multiple Rental Properties: Your Questions, Answered

If you’ve recently started investing in real estate, chances are you're managing just one property. However, as you begin to scale your rental business, you’ll need to manage multiple units across more than one property, which means you’ll have to insure more than one home. 

Obtaining landlord insurance coverage for one property is pretty straightforward, but how do you insure multiple properties at the same time? The insurance plan needed to cover a single-family home with an in-law unit is different from the coverage needed for a 10-unit multi-family building. Additionally, not all insurance policies offer the same amount of coverage, which means you may have to take out separate policies to cover all of the properties in your portfolio. The rental property policies you qualify for depend on a variety of factors, such as the replacement cost of your properties and the kind of tenants you have.

In this blog, we’ll get to all of your landlord insurance FAQs. We'll cover why a homeowner's insurance policy isn't enough for landlords, how to simultaneously insure multiple rental properties, and what to look for when evaluating rental property insurance policies.

Why do property owners need landlord insurance?

Owning multiple properties comes with many benefits, such as the ability to establish multiple passive income streams that are consistent and reliable, especially if you can rent out your units at fair rental value. On the flip side, you’re responsible for the maintenance of more than one property, as well as the accidents that may occur on those properties. As a result, you’ll need to increase your property insurance in tandem with your rental portfolio. 

Landlord insurance is designed specifically for homeowners who rent out their properties and comes with two types of coverage: property and liability protection. Property protection kicks in when your rental property is damaged due to a natural disaster or tenant negligence. Liability protection kicks in when there's a lawsuit brought against you due to an accident that takes place on your property.

Homeowners insurance covers a variety of personal property damage, home repairs, and liability claims. However, it falls short of a landlord's total coverage needs. These needs grow as you acquire more rental properties, which makes obtaining a landlord insurance policy a necessity.

Landlord insurance gives property owners the peace of mind they need to house tenants on their property. You want to make sure you extend that peace of mind to all properties under your name. If you're wondering: "What will landlord insurance cover?" ask an insurance agent when inquiring about policies online, over the phone, or in person. Different policies will have different levels of coverage.

How can real estate investors insure multiple properties at the same time?

Seeking advice from a tax, legal, or insurance professional can help you better understand how landlord insurance works and make sure all of your properties are fully protected. Property owners can insure multiple rental properties either as an extension of their existing homeowner's policy or through a stand-alone insurance policy. 

Insuring multiple properties can be challenging, because each property is unique. Although you may have one clear goal as a rental owner, each rental property has different needs. Insurance companies will want to understand what those needs are before providing you with a policy. If you’re not careful, you can easily end up paying for more than you need. Here are a few strategies you can use to avoid breaking the bank when purchasing landlord insurance for multiple properties:

Compare and contrast coverage plans

The first step to getting adequate coverage without spending a fortune on insurance is to shop around for policies. Request quotes from multiple insurance companies and speak to their representatives about the extent of the policy coverage before making a decision. Make sure to ask about property and liability coverage, as well as any additional coverage you may need, such as flood or earthquake insurance. 

You may be able to save on insurance premiums if your properties come with certain features that mitigate the chance of accidents or theft occurring, such as deadbolt locks, smart home devices, or recent renovations. Be sure to ask insurance representatives whether you qualify for any discounts.

Regularly adjust your insurance deductibles

Insuring multiple properties can get pricey. To save on landlord insurance, you can increase your deductibles on other insurance plans. The higher your deductible is on your homeowner's insurance policy, the lower your premium will be, which means you’ll have to pay less every month. This may allow you to allocate more funds to your landlord insurance as you acquire more properties. Just be sure you have enough saved to cover the difference in your deductible.

Consolidate existing insurance policies into one 

Purchasing a new insurance policy for each one of your rental properties is expensive and can get hard to keep track of. Although real estate investors typically purchase a new policy as soon as they purchase a new home, there are other ways to insure multiple properties at the same time. Some companies allow you to bundle multiple properties into one landlord insurance policy, making property insurance easier to manage.

Usually, when you acquire a new property, your current insurance company can add the new property to your existing landlord insurance policy. However, if they're unwilling to do so, you may want to consider transferring your business over to a different insurance company that is willing to insure your entire rental portfolio under a single policy. Not only will this make it easier to manage multiple rental properties as you grow your business, but it could save you money in the long term.

Is one insurance policy enough to cover multiple properties?

If you’re new to owning multiple properties, you may be wondering if one insurance policy can provide enough coverage for all of your assets. In short, the answer is -- yes! However, you’ll have to spend some time vetting insurance companies to find a policy that works for your specific rental portfolio. You can insure more than one property under one policy in a few ways: 

• Scheduled itemization: The first option is to add multiple properties as scheduled items under one policy. This would list each property separately and insure them according to their individual property value. This method makes sense for real estate investors who are just starting out and are slowly acquiring property.
• Endorsements: The second option is to add multiple properties as endorsements, allowing you to obtain extra coverage in your property insurance policy without specifically listing each property. This may make sense for real estate investors who have been investing in real estate for a while and frequently buy and sell property.
• Blanket policy: Lastly, you can purchase a blanket policy that covers multiple properties up until a certain limit of liability. This provides a maximum dollar amount of coverage for all properties in your portfolio. This method is best for real estate investors who don't have time to add and eliminate properties as they are bought and sold. A blanket policy provides extensive coverage for multiple properties; however, you may end up paying for more than you need to.

The exact number of properties you can insure under a single policy varies from one company to another. However, most insurance companies offer multi-property coverage for real estate investors with four or more properties in their portfolio. Discuss your options with an insurance professional before choosing a policy.

Elements of a policy to evaluate when shopping for insurance for multiple properties

In your search for multi-property insurance, you’ll come across a variety of policies. Here’s what you need to pay attention to when comparing one landlord insurance policy to another: 

Extent of coverage

One of the most important aspects of any insurance policy is how much coverage it provides. The amount of coverage you’ll need will depend on the total value of your property as well as your rental income. You want to be sure that your policy covers the full replacement value of your property.

Deductible amount

Every insurance policy requires policyholders to contribute a certain dollar amount before their insurance coverage kicks in, which is commonly known as a deductible. In most cases, you’ll have some leeway in choosing your deductible amount when purchasing a new policy. You can choose a lower deductible and a higher premium, or a higher deductible and a lower premium. 

High deductibles on property insurance range from $50,000 to $100,000. Choosing to pay a high deductible can save you money on monthly payments; however, you'll be responsible for first paying the deductible amount before your insurance kicks in. Low deductibles on landlord insurance can be as low as $500. However, the trade off is a higher monthly premium on your insurance policy.

If you have a large savings fund you can tap into in case of an emergency, you may want to purchase a landlord insurance policy with a high deductible and low premium. However, if you're still working on your rainy day fund, you may want to just bite the bullet and pay a higher premium.

Additional liability

Most insurance companies offer some kind of additional liability coverage. Obtaining additional protection may be a good idea if one of your properties is more vulnerable than the rest due to problematic tenants, pending home repairs, or if the property is simply located in an area at risk for natural disasters, theft, or vandalism. 

The bottom line on insuring multiple rental properties

Obtaining adequate property insurance is important for any real estate investor, especially those with multiple properties. Homeowners insurance offers some level of protection for a property owner, but not enough for a landlord. Landlord insurance fills the gap by protecting rental owners in case they get sued or their property gets damaged. However, insuring multiple properties at the same time can be difficult and expensive as your rental portfolio starts to grow.

To save on landlord insurance costs, make sure to shop around, request quotes, and ask about discounts you may qualify for. Adjusting deductibles on other insurance policies can also help you save money. Just make sure you have enough cash saved up to pay a larger deductible in the event of an emergency. Consolidating existing property insurance with new insurance plans is another cost-effective way to increase your landlord insurance coverage, especially if your properties share similarities. Consult with an insurance professional to find the best landlord insurance for your rental portfolio. 

Azibo Insurance Services LLC f/k/a Zibo Insurance Services LLC, a wholly owned subsidiary of Azibo Inc., is a licensed insurance producer. Contact us to discuss your specific insurance needs.

Disclaimer: The information provided in this post does not, and is not intended to, constitute insurance advice; instead, all information, content, and materials are for general informational purposes only. This content may not constitute the most up-to-date insurance information. Readers must contact a licensed insurance agent or company to obtain quotes, advice, and guidance with respect to any insurance matter. No reader, user, or browser of this article should act or refrain from acting on the basis of information herein without first seeking the advice of a licensed insurance producer.