Landlord Insurance Cost Estimator

Base premium    = Dwelling coverage / 1,000 x Base rate
Dwelling part   = Base premium x Property type x Age x Region x Deductible x Claims
Deductible      = 1 - 0.12 x log2(Deductible / 1,000)
Claims          = 1 + 0.15 per claim in the last five years
Liability part  = 120 x (1 + 0.33 x log2(Limit / 300,000))
Loss of rent    = Monthly rent x Months covered x 2%
Annual premium  = (Dwelling + Liability + Loss of rent) x (1 - Discounts)

Carriers rate dwelling fire policies off a rate per $1,000 of coverage and adjust it with multiplicative factors, which is exactly what this model does. The default base rate of $3.10 is calibrated so that a $300,000 dwelling with neutral factors, $300,000 of liability, and twelve months of loss of rent lands at roughly $1,482 — close to the commonly cited national average landlord premium. Replace it with a rate from a real quote and every other figure becomes far more accurate.

Step by step

How the calculation works

1. 1Insure the building, not the purchase price. Dwelling coverage should equal what it would cost to rebuild, which excludes the land and can be well below or well above market value depending on the market. The [home insurance replacement cost estimator](/calculators/home-insurance-replacement-cost-calculator) produces that figure directly.
2. 2Landlord policies are dwelling fire forms, usually DP-3, and they differ from a homeowners policy in what they exclude as much as what they add. There is no coverage for a tenant belongings, minimal coverage for your own contents, and the liability section is written around your role as a landlord rather than as an occupant.
3. 3Loss of rent is the coverage landlords under-buy and then need. It pays the rent while the property is uninhabitable after a covered loss, and at roughly 2 percent of the limit it is one of the cheapest lines on the policy. Twelve months of a $1,800 rent adds about $432 a year and protects $21,600 of income.
4. 4Raising the deductible is the most reliable way to cut the premium, and the effect is real but not linear. Moving from $1,000 to $2,500 trims roughly 16 percent off the dwelling portion; going to $5,000 saves about 28 percent. Only take the higher deductible if you can absorb it without touching the rent that is paying the mortgage.
5. 5Claims history matters more than most owners expect. Each claim in the last five years adds roughly 15 percent, so two small claims can cost more over a renewal cycle than paying for the damage out of pocket would have.
6. 6Set the premium against the income it protects. At roughly 7 percent of annual rent, insurance is a normal operating expense; well above 10 percent it is worth shopping. Feed the result into the [rental property ROI calculator](/calculators/rental-property-roi-calculator) or the [rental yield calculator](/calculators/rental-yield-calculator) to see what it does to net return.

Related guides

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