Insurance Coverage Every Landlord Needs to Understand

Insurance coverage for your rental property can be tricky. Understanding each option is how to ensure you are covered no matter what happens to your property. 

Property Damage: Is it covered?

At Oak City Properties, we experience a lot of interesting situations when it comes to our full service property management. Last month, during the cold snap that hit North Carolina, one of our properties experienced serious damage. As temperatures dropped, a pipe burst and along with it came the ceiling. Luckily, the home’s property manager was able to call in one of our trusted contractors and remedy the problem quickly, so the life of both the tenant and landlord wasn’t completely disturbed over the holidays.  

Insurance Options

Another lucky turn of events from that scenario was that both the tenant and the owner of the home had insurance to cover the damages. 

According to Chris Faw with Rimmer Insurance, there are three main ways to insure a property when a tenant does significant damage. While no clear policy will cover major tenant damage, some policies are better than others.

Three Types of Insurance 

Essentially, there are three types of “Landlord” insurance policies. 

  • DP 1
  • DP 2 
  • DP 3

A basic Dwelling Policy, or “DP” for short, is a type of home insurance that protects rental or vacant homes from nine named perils. Perils such as

  • Fire and lightning
  • Internal and external explosions
  • Windstorm
  • Hail
  • Riots
  • Aircrafts
  • Vehicles
  • Volcanic explosions

Sounds intense, right? So, let’s take some time to make this less formidable. 

Insurance Breakdown  

A standard homeowners policy is made up of two basic parts: the dwelling itself and the property inside. When renting, these two spaces are broken apart into 

  1. one part for the owner (dwelling property insurance — landlord policy)
  2. one for the tenant (personal property insurance — renter policy)

A DP 1 plan is the least expensive option, but it covers considerably less. Remember the house with the busted pipe? Under the DP 1 plan, that “peril” isn’t covered because it was due to water damage from a broken pipe. 

A DP 2 plan covers more events and the “perils” list is considerably more comprehensive, but there are still limitations. 

The most comprehensive plan a landlord can get under normal circumstances is the DP 3 insurance plan. This plan is an open-perils policy with only a few exceptions and covers the home for its replacement cost. 

Final Thoughts on Perils

While there is no way to guarantee complete coverage for everything, the best thing a landlord can do is to be knowledgeable about their insurance coverage. Protecting your property when you are not the one living in it can be challenging, so it’s a good idea to get the best coverage possible for the situation. 

If you don’t have an insurance agent, contact Chris Faw with Rimmer Insurance and get the support you need for your personal and business needs. 

Need Help With Your Property?

If you’re not the kind of person who wants to deal with broken water pipes and collapsing ceilings, it may be worth your time to contact a property management service. A full management service will market the property, find tenants, provide 24/7 maintenance, help with accounting/tax services, decide on the right insurance options for our property and deal with any court appearances in the event of an eviction. 

At Oak City Properties, we have been helping those in the Raleigh area purchase and sell homes for years! Whether you are a family trying to sell your home or a landlord wanting to downsize your rental portfolio, our full-service property management company is here to help.

If you are interested in learning more about our services or want to speak to our listing agents, give us a call at (919)-232-9222 or check out our website:

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