As a real estate investor, your rental property is more than just bricks and mortar—it’s your income. But accidents, lawsuits, or natural disasters can turn that investment into a financial nightmare.
Below are 10 must-know tips for 2024–2025, backed by the latest data and trusted sources like the IRS, NAIC, and industry leaders like Obie Insurance.
Tip 1. Know the 3 Types of Landlord Insurance
Landlord policies aren’t one-size-fits-all. The National Association of Insurance Commissioners (NAIC) reports that 37% of landlords are underinsured because they pick the wrong coverage type.
Here’s what you need:
- DP-1: Basic coverage for fire, wind, or vandalism. Cheap but limited.
- Example: A small rental in a low-risk area might use DP-1 to save money, but it won’t cover a kitchen fire caused by faulty wiring.
- DP-3: Full protection for most disasters (except floods/earthquakes). Covers repairs + lost rent.
- Best for: Full-time investors with multiple properties.
- Landlord Liability Insurance: Protects if a tenant sues you for injuries or property damage.
- Key stat: Slip-and-fall lawsuits jumped 19% in 2024 (NAIC).
Pro Tip: “DP-3 policies are the gold standard for full-time investors,” says Mike Nunez, Head of Claims at Obie Insurance.
“They adapt as risks evolve—like covering smart home tech breaches by 2025.
For example, if a hacker disables your property’s security system, DP-3 can cover the damages.”
Tip 2. Always Add “Loss of Rent” Coverage
Imagine a burst pipe forces tenants to move out for months. Without “loss of rent” coverage, you lose income and pay repairs.
A 2025 Insurance Information Institute study found 28% of landlords skipped this add-on, costing them $12,000+ on average per claim.
Real-life scenario: After a tornado damaged roofs in Oklahoma in 2024, landlords without loss of rent coverage waited 4–6 months for repairs while losing $3,000/month in rental income.
Obie Insurance offers loss of rent as a standard feature in its landlord policies—no extra fees. Their 2025 data shows clients recovered 92% of lost income during covered disasters.
Tip 3. Don’t Cheap Out on Liability Limits
A tenant’s guest slips on icy stairs? You could face a $300,000 lawsuit . Yet IRS data shows 44% of landlords spend less than $500 per year on insurance to protect themselves.
Many property owners try to save just $15/month by skimping on coverage, but for 2025, experts recommend at least $1 million in liability protection per property .
“Liability risks are skyrocketing with social inflation,” warns Sarah Lee, a risk analyst at NAIC.
“Juries now award payouts that are 22% higher than pre-pandemic levels. For example, a 2024 Texas case awarded $850,000 for a broken arm caused by a loose porch railing .”
Cost Tip: Raising liability limits from $500,000 to $1 million typically costs only $10–$20 extra per month (Obie Insurance)
Tip 4. Check for “Vacancy Clauses”
Most policies reduce coverage if your property sits empty for 30+ days. With rising vacancy rates (6.1% in 2024, per U.S. Census Bureau), this is critical.
Avoid clauses that cut theft or weather damage protection during vacancies.
Example: A Florida landlord’s policy denied a $15,000 theft claim because the home was vacant for 32 days. They hadn’t upgraded to a “forgiving” vacancy clause.
Obie’s Solution: Customizable vacancy terms, even for seasonal rentals. Their policies allow up to 90 days of vacancy without coverage cuts.
Tip 5. Bundle Policies for Big Discounts
Own multiple properties? Bundling them under one insurer can cut premiums by 18–25% .
According to the Insurance Journal in 2024, investors with five or more units saved an average of $2,100 per year by bundling.
How it works: Bundling landlord policies with umbrella insurance (extra liability coverage) often unlocks deeper discounts.
For instance, Obie offers a 22% discount for three or more properties and includes a free umbrella policy review 10.
“We’ve seen clients save 20% just by combining landlord and umbrella policies,” notes David Kim, an Obie Insurance agent.
“One investor reduced their annual costs from $5,400 to $4,320 for six units.”
This approach not only simplifies management but also enhances protection against liability risks, which are rising due to social inflation
Tip 6. Update Coverage for Climate Risks
2024–2025 forecasts predict stronger hurricanes, wildfires, and floods. Standard landlord policies exclude these, so add-ons are essential:
- Flood Insurance: Required in high-risk zones. FEMA’s 2025 updates expanded flood maps—check yours.
- Surprising fact: 40% of flood claims come from medium- or low-risk areas (FEMA).
- Earthquake Insurance: Pays for structural repairs.
Stat: Only 12% of Midwest landlords have earthquake coverage, despite 400% more tremors since 2020 (USGS).
In 2024, a 5.1-magnitude quake in Missouri caused $8M in uninsured rental property damage. West landlords have earthquake coverage, despite 400% more tremors since 2020 (USGS).
Tip 7. Screen Tenants—But Still Get Coverage
Thorough tenant checks lower risks, but bad luck happens. A 2025 Rental Housing Journal report found 1 in 4 tenants cause at least $1,000 in damage.
Ensure your policy covers:
- Malicious damage: Like punched walls or broken windows.
- Case study: An Oregon tenant trashed a kitchen, causing $18,000 in damages—covered under Obie’s policy.
- Pet injuries: Dog bites cost $50,000+ on average.
Screening tip: Use apps like RentPrep to check credit scores, eviction history, and references.
Tip 8. Review Policies Yearly
Rent prices, labor costs, and laws change fast. A policy from 2023 might not cover 2025 repair rates. Schedule annual reviews with your agent to adjust:
Dwelling Coverage: Match local rebuild costs (up 14% since 2022, NAHB). For example, a $200K rebuild estimate in 2023 might cost $228K today.
Rent Guarantee Insurance: Add if your area has unstable employment rates. 2025 trend: 33% of Gen Z renters have gig jobs, increasing income instability (Pew Research).
Checklist:
- Compare current rebuild costs vs. coverage.
- Update liability limits.
- Add new discounts (e.g., smart home sensors).
Tip 9. Keep Tax-Deductible Records
Landlord insurance premiums are tax-deductible per IRS Publication 527.
Save bills for:
- Policy renewals.
- Disaster-proofing upgrades (e.g., storm shutters).
- Safety inspections.
2025 Change: The IRS now allows deductions for cybersecurity add-ons (e.g., hacking protection for smart homes). Example: A $200/year smart lock cybersecurity fee can now lower taxable income.
Audit tip: Use apps like Stessa to digitize receipts and track deductions automatically.
Tip 10. Work With Specialists—Not General Agents
Most State Farm or Allstate agents focus on auto/home insurance. Partner with companies like Obie Insurance that only serve landlords. Benefits include:
- Faster claims for rental-specific issues (e.g., squatter removal).
- Knowledge of local landlord-tenant laws.
“Generic agents often miss nuances like short-term rental exclusions,” explains Obie CEO Ryan Letzeiser. “Specialization matters.”
Industry Trends and Data
In 2025, the landlord insurance market is seeing trends like increased focus on energy efficiency, with some states requiring properties to meet specific ratings.
The NAIC reports that many landlords still lack specialist coverage, risking exposure to large expenses (Landlord Insurance Statistics 2023 | Alan Boswell Group).
Additionally, companies like Obie Insurance are innovating with tech-enabled quotes, offering fast, affordable options for investors, with over $25 billion in property insured (Insurance for Landlords and Real Estate Investors | Obie).
Table: Key 2025 Landlord Insurance Statistics
| Statistic | Value |
| Average Slip and Fall Settlement | $15,000–$45,000 |
| IRS Standard Deduction (Single) | $15,000 |
| IRS Standard Deduction (Married) | $30,000 |
| Obie Insurance Property Covered | Over $25 billion |
This table summarizes critical data, helping investors understand costs and coverage needs.
Final Word
Landlord insurance isn’t just a safety net—it’s your business’s backbone. By following these tips and partnering with experts like Obie Insurance, you’ll avoid costly mistakes and sleep easier.
For a 2025 coverage checkup, use Obie’s free online tool (obie.com) to compare quotes in under 10 minutes.