Landlord insurance premiums have climbed because insurers are paying out more for water damage, theft, and liability claims than they did five years ago

The cost increase is real and widespread. Insurance companies that cover rental properties have raised rates because the frequency and size of claims have both grown. Water damage from burst pipes and roof leaks now accounts for a larger share of claims than it did a decade ago. Theft and break-ins have spiked in some regions. Liability claims—when a tenant or visitor is injured on the property—have become more expensive to defend and settle. Insurers also face higher costs to rebuild or repair properties after damage, because construction labor and materials cost more than they used to.

The increases vary by location, property type, and insurer. A landlord in a flood-prone area will see steeper hikes than one in a dry region. A single-family home typically costs less to insure than a multi-unit building. Some insurers have raised rates more aggressively than others, which means shopping around still matters.

Key Takeaways

  • Water damage claims have become more frequent and more expensive, driving up the cost of coverage for all landlords.
  • Liability claims and theft losses have increased in many regions, prompting insurers to raise premiums across the board.
  • Construction and repair costs have risen, so the cost to rebuild a damaged property is higher than it was five years ago.
  • Rate increases vary by location, property condition, and insurer, so comparing quotes from multiple companies can still lower your premium.
  • Discounts for security systems, multiple properties, and claims-free history remain available and can offset some of the increase.

Water damage claims are now the largest driver of landlord insurance costs

Water damage has become the single biggest expense for landlord insurers. Burst pipes, roof leaks, and frozen water lines generate claims that often run into thousands of dollars. A single burst pipe in a multi-unit building can damage multiple units and trigger claims from several tenants at once. Insurers have responded by raising premiums and tightening coverage rules—some now exclude water damage from freezing unless the landlord can prove the property was heated to a certain temperature.

The frequency of water claims has increased partly because older rental stock has aging plumbing and roofing systems. Deferred maintenance is common in rental properties, and insurers know this. They have also seen more claims tied to weather extremes—heavy snow loads on roofs, intense rainfall overwhelming gutters and drainage systems. Climate patterns have shifted in some regions, making certain types of water damage more likely than they were historically.

If your property is older or has a history of water damage, your insurer may charge a higher rate or require you to upgrade the plumbing or roof before they will renew coverage. Getting a plumbing inspection or roof inspection before you renew can sometimes lower your premium, because it shows the insurer the property is maintained.

Liability claims have become more expensive to defend and settle

A tenant or visitor injured on your property can file a liability claim against your landlord insurance. These claims have grown in both frequency and cost. Legal defense alone—paying a lawyer to represent you in court—now runs higher than it did years ago. Settlements and jury awards have also increased, particularly in cases involving serious injury.

Insurers have raised liability coverage limits and premiums to account for this trend. They have also become stricter about which properties they will insure. A property with a history of tenant injuries, a poor maintenance record, or unpaid code violations may be declined by some insurers or quoted at a much higher rate.

You can reduce your liability risk—and sometimes your premium—by maintaining the property well, fixing hazards promptly, and documenting all repairs. Some insurers offer small discounts for landlords who complete a property safety checklist or install grab bars and handrails in common areas.

Construction and repair costs have risen sharply

When an insurer calculates your premium, they estimate how much it would cost to rebuild your property if it were destroyed. That estimate is called the replacement cost value. As labor rates and material costs have climbed, replacement cost values have climbed too. An insurer who estimated it would cost $150,000 to rebuild your house five years ago might now estimate $180,000 or more. Your premium is partly based on that number, so the increase in replacement cost drives up your rate.

Lumber, drywall, concrete, and skilled trades like electricians and plumbers all cost more than they did in 2019. Supply chain disruptions and labor shortages have added to these costs. Insurers have adjusted their replacement cost estimates upward across the board, which means nearly every landlord has seen a rate increase tied to this factor alone.

When you renew your policy, ask your insurer whether they have updated your replacement cost value. If it seems too high, you can request a professional appraisal, though you will usually pay for it yourself. If it seems too low, raising it now is cheaper than discovering later that you are underinsured.

Theft and break-in claims have increased in some regions

Property crime rates have risen in certain areas, and insurers track this closely. A region with rising theft or break-in claims will see higher premiums for all landlords in that area, even if your own property has never been burglarized. Insurers use crime data and loss history to set rates by ZIP code or neighborhood.

Vacant properties and properties in areas with high turnover attract more theft. Copper piping, appliances, and HVAC equipment are common targets. If your property sits vacant between tenants, your insurer may require you to have it inspected regularly or may exclude theft coverage during vacancy periods. Some insurers now charge higher rates for properties that are vacant for more than 30 or 60 days at a time.

Installing deadbolts, security cameras, and alarm systems can lower your premium with some insurers. A monitored alarm system may earn you a 5 to 15 percent discount, depending on the company. Keeping the property occupied and well-maintained also signals lower risk to insurers.

Insurers have tightened underwriting standards and reduced competition

Some insurance companies have stopped writing new landlord policies or have pulled out of certain states entirely. This reduces the number of insurers competing for your business, which puts upward pressure on rates. When there are fewer options, insurers have less incentive to offer competitive pricing.

At the same time, insurers have become more selective about which properties they will cover. A property with deferred maintenance, a history of claims, or code violations may be declined or quoted at a premium rate. Insurers are also requiring more detailed information about the property—age of roof, plumbing, electrical system, and HVAC—before they will quote a rate. This underwriting is more thorough and more expensive for the insurer, and some of that cost is passed to you.

Shopping around is more important now than it has been in years. Rates vary significantly between insurers, and some companies specialize in higher-risk properties or older buildings. A broker who works with multiple insurers can sometimes find better rates than you would find on your own.

Your options for managing higher premiums

You cannot control the overall market, but you can control some of the factors insurers use to set your rate. Maintaining the property well—fixing leaks, updating old plumbing, keeping the roof in good condition—signals lower risk and can help keep your premium down. A property inspection before you renew can sometimes lower your rate if it shows the property is well-maintained.

Bundling your landlord policy with other insurance (homeowners, auto, umbrella) often earns a multi-policy discount. Increasing your deductible—the amount you pay out of pocket before insurance kicks in—lowers your premium, though it means you pay more if you have a claim. Paying your premium annually instead of monthly sometimes saves money, because you avoid monthly payment fees.

If your current insurer's rate has jumped significantly, get quotes from at least two other companies before you renew. Rates vary widely, and a company that was expensive five years ago may now be competitive. Be honest about the property's condition and history when you get quotes, because misrepresenting the property to get a lower rate can lead to a claim denial later.

Frequently Asked Questions

Will my landlord insurance rates keep going up every year?

Rates will likely continue to increase, but not necessarily at the same pace as the last few years. Once insurers have adjusted their rates to match current claim costs and construction prices, the increases may slow. However, individual rate hikes depend on your property, your claims history, and your location. A property in good condition with no claims may see smaller increases than one with a history of damage.

Can I lower my premium by dropping coverage I don't need?

Landlord policies cover different things—the building itself, liability, loss of rent if the property becomes uninhabitable, and sometimes theft or vandalism. You cannot drop liability coverage, because your mortgage lender requires it. You can sometimes raise your deductible or exclude certain perils (like water damage from freezing), but this leaves you exposed to risk. Before you drop coverage, understand what you would pay out of pocket if that type of damage occurred.

Why did my rate go up more than my neighbor's?

Insurers use different rating factors, and they weight them differently. Your property's age, condition, claims history, and the type of tenants you have all affect your rate. If your property is older, has had water damage claims, or is in a higher-crime area, your rate may increase more than a newer property with no claims. Some insurers also charge more for properties with short-term or transient tenants.

Should I switch insurers to get a lower rate?

Yes, if you have received quotes from at least two other companies and they are significantly lower. Switching is common and does not penalize you. However, make sure the new policy covers the same things as your old one—some cheaper policies have higher deductibles or exclude certain types of damage. Also check whether the new insurer has a good reputation for claims handling, because the cheapest premium is not worth it if the company denies claims.

What happens if I cannot afford the new premium?

If your premium has increased beyond what you can manage, talk to your insurer about raising your deductible or removing optional coverage. You can also shop for a different insurer—rates vary widely. If you own multiple properties, bundling them with one insurer sometimes lowers the overall cost. If you are considering dropping coverage entirely, do not—your mortgage lender requires it, and you would be personally liable for any damage or injury on the property.