8 Things to Check Before Signing Your Landlord Insurance Policy

In This Article

This article is presented by Steadily.

If you’re like most landlords, you probably assume that once you pick a policy and pay your premium, you’re covered. Simple, right?

Unfortunately, that assumption is exactly how landlords end up blindsided by denied claims, unexpected exclusions, and thousands of dollars in out-of-pocket losses.

Your landlord insurance policy is one of the most important business contracts you’ll ever sign. It determines what’s protected, what isn’t, and how much financial risk you’re actually carrying—long before anything ever goes wrong.

But these forms are long, technical, and packed with fine print that’s easy to skim past when you’re trying to close on a property or onboard a new rental. According to the insurance experts over at Steadily, many of the most painful surprises come from misunderstandings that could have been caught before signing.

Think about the most common losses landlords experience: water damage, liability claims, aging roofs, tenant-caused damage, and weather events. Many of these issues are covered… but many others are covered only under certain conditions, or not covered at all. The difference comes down to understanding what’s in your policy before you commit.

Let’s walk through the eight things every landlord should check before signing a policy, so you can avoid costly gaps, spot red flags early, and make smarter decisions for your portfolio.

While every insurer structures things a bit differently, investor-focused providers like Steadily make this process much easier by using clear, landlord-specific language and coverage options built for real-world rental risks.

1. Understand What’s Actually in Your Policy

The first thing you need to understand before signing your policy is what’s actually inside it. This sounds obvious, but most landlords never read past the declarations page, and that’s where costly mistakes begin.

Steadily’s general guidance is that there are seven core components you’ll see in nearly every insurance contract. Knowing how to read each one gives you a massive advantage when comparing quotes or evaluating exclusions.

Declarations page

This is the snapshot of your policy. It lists:

The property address

Named insureds (who’s covered)

Policy period

Coverage limits

Deductibles

Key endorsements

Most landlords stop reading here, but this page only tells you what you think you have, not what you truly have.

Insuring agreement

Think of this as the “promise” section. It outlines:

What the insurer agrees to cover

Under what circumstances they’ll pay

The basic framework for how your protection works

If the declarations page is the summary, the insuring agreement is the foundation.

Definitions

Coverages

This section specifies exactly what losses are covered and under what limits. It’s where you’ll find:

Dwelling coverage

Other structures

Loss of rent

Personal property (if applicable)

It’s important to read this section carefully so you understand the true scope of your protection.

Exclusions

This is where insurers outline what is not covered. Common exclusions include:

Floods

Earthquakes

Neglect

Wear and tear

Sewer backup (unless endorsed)

Many landlords are shocked when something they assumed was covered appears here, making it essential to read before signing.

Conditions

Conditions are the rules you must follow for coverage to apply. Examples include:

Maintenance requirements

Timelines for reporting claims

Steps you must take after a loss

Missing a condition, even accidentally, can jeopardize a payout.

Endorsements

Endorsements modify the policy. They can:

Add coverage

Limit coverage

Clarify terms

For landlords, endorsements are often where essential protections live, such as:

Ordinance or law coverage

Sewer backup protection

Short-term rental endorsements

Before you sign anything, go through these seven sections with a fine-tooth comb. This is where the most important coverage details and the biggest potential pitfalls live.

2. Confirm Whether You Have Named Peril or Open Peril Coverage

One of the quickest ways to misunderstand your insurance protection and end up with an unexpected denial is not knowing whether your policy uses named peril or open peril coverage. The difference is simple, but the financial impact can be huge.

Steadily’s policy guide highlights this as one of the first questions landlords should ask, because everything else in your policy flows from this choice.

Named peril coverage: Only what’s listed is covered

A named peril policy protects you only against the specific events listed in the contract. If it’s not named, it’s not covered, period.

There are two types:

1. Basic named perils covers a limited set of events, such as:

Fire

Lightning

Windstorms or hail

Explosions

Smoke

Vandalism

Riots

Damage from vehicles or aircraft

Sinkhole collapse

Sprinkler leakage

Volcanic activity

2. Broad named perils include everything in the basic list, plus additional protections like:

Burglary

Falling objects

Ice or snow weight

Frozen plumbing

Accidental water discharge

Electrical issues

Named peril policies can work well, but only if you fully understand which events are included and which aren’t.

Open peril coverage: Everything is covered unless excluded

An open peril policy flips the script. Instead of listing what is covered, it lists what isn’t. If the cause of loss is not specifically excluded, it’s covered.

This typically provides:

Broader protection

Fewer gray areas during claims

Greater peace of mind for landlords

But open peril policies are also more expensive, and not all exclusions are obvious at first glance.

Why this choice matters for landlords

Knowing whether you have named or open peril coverage affects:

How you evaluate risk

What supplemental endorsements you may need

How claims are handled

Whether certain losses will be denied outright

For example, a basic named-peril policy might deny a claim for ice dam damage, while an open-peril policy might cover the same event unless ice dams are explicitly excluded.

Before signing your policy, read the definitions and coverages pages carefully. Notice whether the perils are listed individually or not.

Check your exclusion. Even open-peril policies can have exclusions you wouldn’t expect. Ask your insurer or broker directly about what type of peril is listed.

And compare your options. Open peril often delivers better long-term value for landlords, but don’t just assume this is the best decision without thoroughly reviewing the policy.

3. Verify Replacement Cost Value vs. Actual Cash Value

Now that you know what your policy covers, it’s time to understand how your insurer will calculate what they owe you after a loss. This is where many landlords get blindsided, because two policies with the same coverage limits can produce very different payouts depending on whether they use Replacement Cost Value (RCV) or Actual Cash Value (ACV).

Steadily’s guide emphasizes this distinction as one of the most important details to check before signing.

Let’s break it down in landlord-friendly terms.

Replacement Cost Value (RCV): The higher, safer payout

With RCV coverage, your insurer pays what it costs to replace or repair the damaged item with a new one of similar kind and quality, without deducting for depreciation. In other words, if your 15-year-old roof is destroyed in a storm, the insurer covers the cost of a new roof, not the depreciated value of the old one.

RCV benefits:

Larger payouts

Better long-term protection

Fewer surprises during claims

Actual Cash Value (ACV): Depreciation hits your wallet

With ACV, the insurer subtracts depreciation from the payout. Using the same roof example: If the roof originally cost $12,000 and depreciation brings its value down to $4,000, then $4,000 is what you get, even if replacement costs $12,000+ today.

ACV benefits:

Cheaper premiums

However, significantly lower claim payouts

Why this matters so much for landlords

Landlords deal with:

Wear and tear

Aging systems

Tenant-caused damage

Weather exposure

That means most items in a rental property have already depreciated. If your policy uses ACV, a major claim could cost you tens of thousands out of pocket.

Even worse, ACV may apply differently to your dwelling versus your personal property, so confirm how each section of your policy is handled.

Questions to ask before signing

Is my dwelling covered at RCV or ACV?

What about other structures?

Is personal property covered at RCV or ACV?

Are there age-related stipulations (for roofs, HVAC, plumbing, etc.)?

The smart move

If your budget allows it, choosing RCV for both dwelling and personal property coverage typically provides the strongest protection for landlords, especially during catastrophic losses.

4. Understand What Kind of Water Damage Your Policy Covers

Water damage is one of the most common, and most expensive, insurance claims landlords face. Not all water damage is treated the same, and what you consider water damage may not match what your insurer considers water damage.

Steadily’s policy guide highlights just how nuanced this category is and why landlords must understand the distinctions before signing a policy.

What’s typically covered

Most landlord insurance policies cover sudden and accidental water damage, such as:

Water damage after a fire: If the fire department or sprinklers drench your property, resulting water damage is generally covered.

Accidental appliance or plumbing leaks: This includes leaks from dishwashers, washing machines, refrigerators, and faulty plumbing.

Burst pipes: Especially those caused by freezing weather, as long as you maintained adequate heat and weren’t negligent.

Roof leaks from storm damage: If a storm tears off shingles or a fallen tree causes a breach, interior water damage is usually covered.

Ice dams: This is when ice builds up on the roof and forces water inside. But, similar to burst pipes, claims may be denied if poor maintenance contributed.

What’s usually not covered

Flooding: Standard landlord insurance almost never covers flood damage, including rising groundwater, storm surges, river overflow, and heavy rain accumulation. If your property is in a flood-prone area, you’ll need separate flood insurance.

Sewer or drain backup: Unless you’ve added an endorsement, backup from drains, toilets, or sump pumps is typically excluded.

Appliance replacement: If your washer leaks, the water damage is covered, but the washer itself usually isn’t.

Neglect-related damage: Slow leaks, ignored repairs, or deferred maintenance often lead to claim denials.

Earthquake-related water damage: If an earthquake causes a pipe to break and flood a room, the water damage is excluded unless you carry earthquake coverage.

Why water damage is such a high-risk blind spot

Water damage can lead to mold growth, structural damage, tenant displacement, loss of rental income, and major out-of-pocket expenses. Lots of water-related scenarios fall into a gray area of coverage, so landlords should read this section with extreme care. You can ask these questions before signing:

What types of water damage are explicitly covered?

Is sewer or drain backup included or available as an endorsement?

Are there maintenance conditions tied to water-related claims?

Do I need separate flood or earthquake coverage?

How does the policy define “neglect” or “seepage”?

Understanding these distinctions could be the difference between a fully paid claim and a five-figure personal expense.

5. Check How Your Policy Handles Roof Coverage

Roof coverage is one of the most misunderstood parts of a landlord insurance policy, and one of the most common sources of claim disputes. Roofs age, storms hit, shingles wear down, and insurers treat all these situations differently depending on the carrier and the state.

Steadily’s guide notes that many insurers reduce roof coverage once the roof reaches a certain age, switching from Replacement Cost Value (RCV) to Actual Cash Value (ACV). This means a much smaller payout if your roof is damaged.

Here’s what landlords need to watch for before signing.

Age-based roof restrictions

Some insurers automatically downgrade older roofs to ACV once they pass an age threshold, often 10, 15, or 20 years. That means you get reimbursed for the roof’s depreciated value, not the cost to replace it. In states with severe weather risks, this downgrade is even more common.

Location matters

Certain states impose stricter rules on roof coverage due to climate risks. For example, Steadily’s guide highlights that Texas insurers are particularly strict about older roofs because of the state’s frequent hailstorms and intense thunderstorms. That means a roof that qualifies for RCV in one state may only qualify for ACV in another.

Cosmetic damage is often excluded

Even if hail or wind damages your shingles cosmetically, many insurers exclude minor denting, surface impacts, and aesthetic-only damage. If the roof still functions, it may not be covered.

Your roof is a first line of defense against water intrusion, mold, structural damage, tenant complaints, and habitability issues. If a storm compromises the roof, you could face multiple layers of costly problems.

To protect yourself ahead of time, you can ask these questions before signing your policy:

Is my roof covered at RCV or ACV?

Does the policy change coverage at a specific roof age?

What documentation is required to prove roof condition?

Are cosmetic damages excluded?

Is there a separate wind or hail deductible?

Getting clear answers now can save you from a painful surprise when a storm hits.

6. Clarify Liability & Defense Cost Limits

Liability coverage is a critical part of your landlord insurance policy. It’s also one of the least understood. Many landlords assume that if they’re sued, their policy will handle everything. Unfortunately, that’s not how liability protection always works.

Steadily highlights a key distinction that can dramatically change your financial exposure: whether your defense costs are inside or outside the liability limit.

Liability coverage: What it actually protects

Liability coverage is designed to protect you if:

A tenant or guest is injured on your property.

Someone sues you for negligence.

You’re pulled into a legal dispute over conditions at the property.

This coverage typically pays for medical bills, legal defense, and settlements or judgments. The payout structure varies, depending on how your policy treats defense costs.

If defense costs are inside the limit, your legal expenses count toward your total liability limit. For example, let’s say you carry $300,000 of liability coverage. If your legal defense costs $85,000, your remaining coverage for the settlement is now $215,000. This can leave landlords dangerously exposed, especially with today’s legal costs.

If defense costs are outside the liability limit, legal fees do not reduce your coverage, and you retain the full liability limit for settlements. This is the preferred structure for landlords. This provides a more predictable, comprehensive protection.

Why this matters for landlords

Legal defense costs can escalate quickly due to tenant injuries, habitability claims, premises liability lawsuits, and disputes surrounding mold, water intrusion, or structural issues. If these costs erode your liability limit, you could be responsible for paying substantial amounts out of pocket.

Here are some questions to ask before signing your policy:

Are defense costs inside or outside my liability limit?

What is my base liability limit?

Are there sublimits for specific types of liability claims?

Are medical payments included separately?

Does the policy offer higher liability options (e.g., $500,000, $1 million)?

Defense cost structure can completely change how protected you are during a lawsuit. It’s one of the most important details landlords should confirm before committing to a policy.

7. Look for Location-Specific Exclusions

Even the strongest landlord insurance policy has limits, and many of those are directly tied to where your rental property is located. Geographic risk is one of the biggest factors insurers evaluate, and depending on your region, certain hazards may be excluded from standard coverage.

This is one of the most common blind spots for landlords, because exclusions aren’t always obvious until a claim is filed.

Flood exclusions (almost always excluded)

Standard landlord insurance does not cover flood damage. This includes flooding caused by storm surges, heavy rainfall, overflowing rivers or lakes, and rising groundwater. If your property sits in or near a FEMA flood zone, you’ll need a separate flood insurance policy, either through the NFIP or private flood carriers.

Earthquake exclusions

Earthquake damage is also typically excluded, unless you purchase an endorsement or a stand-alone policy. This matters even if you’re not in California. States like Utah, Washington, Oregon, Oklahoma, and South Carolina all experience seismic activity that can cause structural damage, cracked foundations, and, importantly, water damage from burst pipes. Without earthquake coverage, those losses are not covered.

Named storm or wind/hail restrictions

Certain states have special deductibles or exclusions for hurricanes, windstorms, and hail damage. For example, Gulf Coast and Atlantic states often have named storm deductibles, while Midwest states may have separate wind/hail deductibles due to severe storms. These deductibles can be based on a flat dollar amount, or a percentage of the property’s insured value (often 1% to 5%).

Wildfire exclusions or underwriting restrictions

In high-risk areas—especially parts of California, Colorado, Arizona, and the Pacific Northwest—some insurers exclude wildfire, require defensible space inspections, or offer limited or restricted coverage. If you invest in these states, wildfire-related underwriting deserves special attention.

Why these exclusions matter

Location-specific exclusions can dramatically change your risk exposure. A policy that looks affordable at first glance may leave you unprotected against the very hazards most common in your region.

Here are some questions you can ask before signing your policy:

Are floods excluded? If so, do I need separate coverage?

Are earthquakes excluded? Is an endorsement available?

Are there special deductibles for wind, hail, or named storms?

Are wildfires covered or restricted?

Are any geographic limitations mentioned in the exclusions or conditions section?

8. Bonus Checks Landlords Often Miss

Even if you’ve reviewed the big-ticket items like perils, water damage, roof coverage, and liability limits, there are still several smaller—but equally important—details buried in your policy that can make or break a future claim. These are the kinds of conditions most landlords overlook until it’s too late.

Vacancy clauses

Most landlord policies change coverage the moment your property becomes vacant. Common restrictions include:

Reduced protection after 30 or 60 days of vacancy

Exclusions for vandalism, theft, or water damage

Special inspections or maintenance requirements

If you invest in value-add properties or have extended turnover periods, vacancy rules matter.

Tenant-caused damage limitations

Many landlords assume that if a tenant causes damage, insurance will cover it. This is not always the case. Some policies exclude:

Tenant negligence

Intentional damage

Pet-related damage

Smoke damage from careless behavior

Review this section closely, especially if you allow pets or rent to higher-turnover tenants.

Maintenance obligations

Insurance policies often include conditions requiring you to:

Keep heat on during freezing weather

Maintain plumbing and HVAC systems

Monitor and repair roof leaks

Manage mold proactively

Failure to meet these obligations can void a claim, even if the damage would otherwise be covered.

Loss of rents coverage details

If a covered loss makes your rental uninhabitable, loss of rent coverage replaces your income. But pay attention to:

Time limits (often capped at 12 months)

Payout caps

Exclusions tied to specific hazards

This coverage is crucial for protecting cash flow, especially during lengthy repairs.

Policy sublimits

Even if your main coverage is strong, sublimits can quietly restrict certain types of claims. Common sublimits include:

Mold remediation

Debris removal

Tree damage

Ordinance or law upgrades

Theft of landlord-owned property

These can drastically reduce payouts if you don’t expect them.

Required documentation processes

Before signing, understand what documentation your insurer requires during a claim, including:

Photos or videos of damage

Receipts for repairs

Proof of maintenance history

Tenant communication logs

Policies often specify these requirements in the “Conditions” section.

These smaller details might not seem urgent during onboarding, but they can become major problems in a crisis. Completing these bonus checks ensures your policy performs exactly how you expect when it matters most.

Why Having an Investor?Focused Insurer Matters

By now, you’ve seen just how many moving parts go into a landlord insurance policy. From exclusions to roof age restrictions to water damage nuances, there’s a lot for investors to keep track of. And the truth is, most landlords don’t have the time nor desire to become insurance experts.

That’s why working with an insurer built specifically for real estate investors can make all the difference.

Steadily specializes in landlord?first coverage, meaning they design every policy, workflow, and support system around the realities you deal with every day. Here’s what that means for you.

Clear, transparent policies (no hidden surprises)

Steadily’s focus on rental properties means their policies are built for the exact scenarios covered here. Instead of ambiguous terms buried in dense documents, they use clear language and investor?friendly structures so you understand what is and isn’t covered, why certain exclusions exist, and how to avoid preventable claim issues. It’s insurance written for landlords, not repurposed for them.

Fast, digital?first quotes when you’re under contract

If you invest regularly, you already know that insurance can be one of the most painful bottlenecks when closing. Calls, back?and?forth emails, and slow approvals can all waste time. When you’re trying to hit a contract deadline or bind coverage for a new rental, speed matters.

Steadily removes that friction by giving landlords instant online quotes, rapid underwriting turnarounds, and a modern dashboard for managing all your properties.

Coverage designed for real?world landlord risks

Because Steadily works exclusively with landlords, their policies automatically account for:

Vacancy?related exposures

Short?term rental needs

Tenant?caused damage

Loss of rent

Liability concerns specific to rental properties

You don’t have to piece together coverage or guess which endorsements you need. Steadily helps you get it right from the start.

Support from people who understand rentals

Whether you’re dealing with a claim, asking about coverage, or insuring a full portfolio, Steadily’s team understands landlord concerns like habitability rules, state?specific risks, renovations and value?add projects, and cash flow protection needs. That context matters when you need fast, accurate answers.

With so many complex details hidden in a landlord insurance policy, partnering with an insurer that specializes in rental properties makes your life dramatically easier. Steadily helps eliminate blind spots, reduce risk, and protect your cash flow with confidence.