How Much Does Landlord Insurance Cost In Florida?

If you own real estate in Florida, you are probably well aware of the value of homeowners’ insurance. When it comes to your rental properties, you might be on the fence about buying landlord insurance. While it isn’t required under Florida law, it might be required per your mortgage, and it is still a good idea.

Landlord insurance in Florida costs around $2,800 a year on average, or $233 per month. This number could be higher or lower depending on factors like additional coverage, the size and value of your rental property, and where the property is located. As experienced Tampa property managers, we can help you budget for landlord insurance to protect your investment.

Eaton Realty is a full-service real estate company based in Lithia, Florida. We help buyers, sellers, landlords, and tenants with their Hillsborough County real estate needs, including first-class property management services. Reach out today to talk to a team member about our property management services in West Central Florida.

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Why Is Landlord Insurance Necessary?

In Florida, landlord insurance is not required by law. In other words, it is perfectly legal to own a rental property and not carry insurance. That being said, almost every landlord will purchase insurance on their rental properties for several reasons.

First, if the purchase of the property was financed, then the mortgage terms will almost certainly require landlord insurance. The reason why is simple: banks want to protect their investment. If a borrower defaults on their mortgage, they want to be able to foreclose on the property - which they won’t be able to do if the property is destroyed and there is no insurance.

Second, property insurance just makes sense. For a relatively minimal cost, you are protected from all types of potential issues. Coverage typically includes:

• Dwelling coverage, which protects the structure of the building itself
• Other structures coverage for any outbuildings that are not connected to the building itself
• Liability coverage that will pay for legal, medical, and repair bills if a person is injured or their property is damaged on or because of your property
• Loss of rent coverage if your rental unit cannot be leased out due to a covered peril.

For example, consider a situation where a large palm tree on your property fell down during a tropical storm, smashing into the neighbor’s roof. Your landlord insurance would cover the cost of repairing the neighbor’s house.

Landlord insurance would also pay for situations such as a slip-and-fall accident on your property. If a tenant has a guest over and that guest falls on a broken stair, you could be liable for their injuries. Landlord insurance would provide a lawyer to defend the personal injury claim, plus pay any settlement or verdict at trial.

Given Florida’s extreme weather, landlord insurance onits own might not be enough. Many policies exclude specific weather events like flooding. You might need to purchase separate flood insurance.

What Factors Influence the Cost of Landlord Insurance?

Landlord insurance costs about 25% more than homeowners’ insurance on average. This is due to increased coverage, such as loss of rental income for a covered peril. It also reflects the reality that rental properties are a bit more of a risk than owner-occupied properties.

In Florida, the average cost of landlord insurance in Florida is $2,860 annually. This number could be significantly higher or lower, based on certain factors.

Property Value and Size

The value and size of a rental property affect the cost of insurance because a more expensive property will cost more to replace. Property insurance typically bases coverage on the replacement cost of the dwelling. This is the amount that it would cost to either rebuild or repair the building in the event of damage or destruction.

Landlord insurance usually is not based on the fair market value of the home. However, the value of the home will affect the replacement cost. For example, a large single-family home will typically cost more to rebuild - and will also cost more on the open market - than a small dwelling. In this way, property value and size impact your landlord insurance costs.

Location

The location of your rental property will also affect the cost of your landlord insurance. Generally, insurance companies will charge higher rates for properties that are located in areas that are prone to natural disasters like hurricanes, tropical storms, and flooding. For West Central Florida, this means that a policy will likely cost more than a policy for a similar property inland would cost.

Insurance companies also evaluate other factors related to location when setting costs. This can include everything from proximity to a fire hydrant to the crime rate for the neighborhood. The company uses complex algorithms to make these determinations.

Property Features

Certain features on your rental property may both make the unit more attractive to tenants and affect the cost of your landlord insurance. For example, if the property has a pool or a separate garage, your insurance costs will likely be higher (and tenants will also be more inclined to want to rent your property).

Some features might make your landlord insurance cost go down. If you have installed security features on your property, such as a fenced-in yard or a security system, then this might reduce your total coverage costs.

Property Age

The age and overall condition of your property will affect how much your insurance premium is as a landlord. Generally, if your house is older and/or in poor repair, then the chances of making a claim are higher. This will typically lead to a higher insurance premium.

Type of Coverage

The type and amount of coverage that you select will influence its cost. There are many endorsements that you can add to your landlord insurance, such as coverage for vandalism and personal property that you may have stored at the rental unit. Any increase in coverage will lead to a higher annual premium.

Deductible Amount

Typically, your premium rate is inversely related to your deductible. In other words, if your deductible (the amount you are responsible for paying if you make a claim) is higher, then your premium will be lower, and vice versa. If you are able to cover a higher deductible, then it may be worth the cost savings of a lower annual premium.

Number of Rental Units and Claim History

Many insurance companies offer a discount if you bundle your insurance policies. This means that insuring multiple rental properties through a single insurance company can reduce the cost of your insurance premiums.

At the same time, your claim history with that company can increase your premiums. Generally, premiums go up when you make a claim. If you have made previous claims, then you can expect your rates to go up accordingly.

Tenants

Insurance companies will consider the type of tenants you have when setting a rate for your policy. Having long-term tenants usually means that they will take better care of the property, which reduces the risk of a claim. Short-term tenants are more likely to damage the property, which can lead to higher insurance premiums.

Ultimately, while landlord insurance is an additional expense, most property owners believe that it is a smart choice to protect their investments. Our experienced property managers can factor the cost of landlord insurance into your budget so that you can account for it when tracking profits and losses. Our Tampa real estate agents can also help you find a rental property that will not only generate solid profits but will be a lower risk when it comes to insurance, which will lead to lower insurance premiums.

Work with a Top-Rated Tampa Property Management Team

If you own a rental property, then getting landlord insurance can protect you from any number of perils. It can even pay you rental income for a period of time if your property can’t be rented due to something like a fire or storm damage. This expense should be considered as part of your broader decision about making an investment in a rental property.

Eaton Realty is a Tampa property management company that helps landlords manage properties throughout Hillsborough County, Florida. We offer comprehensive, high-quality property management services and are certified by the National Association of Residential Property Managers. We can help you with every aspect of the process, from finding a great rental property to buy to managing the day-to-day details of owning a rental unit. To learn more about our property management services, fill out our online contact form or call our office at 813-672-8022.