You moved across town, but instead of selling your old house, you decided to rent it out. It’s a smart move for many families, but there’s a catch: the homeowners policy you’ve had for years may not be the right policy anymore. Here’s what Tennessee landlords should know about rental dwelling insurance.
Quick takeaway
- Homeowners policies are generally built for owner-occupied homes, not rentals.
- Landlord policies come in forms like DP-1 (basic) and DP-3 (broader).
- Loss of rents coverage can replace income while a covered loss is repaired.
- Vacancy limits and tenant belongings are two common gaps.
Why your homeowners policy may not fit
Homeowners policies are generally designed for homes the owner lives in. Once you rent the home to someone else, the risks change, and many carriers expect you to switch to a landlord policy, often called a dwelling fire policy. Waiting until after a claim to sort this out can be a costly surprise. Coverage rules vary by policy and carrier, so let your agent know as soon as you plan to rent.
DP-1 vs. DP-2 vs. DP-3, in plain English
Landlord policies are commonly written on one of three forms:
- DP-1 (basic): covers a short list of named perils, such as fire, lightning, and internal explosion, and often pays actual cash value. Usually the lowest cost, with the most gaps.
- DP-2 (broad): adds more named perils, such as windstorm, hail, and certain water damage, and may pay replacement cost.
- DP-3 (special): typically covers the dwelling on an “open perils” basis, meaning any cause of loss not specifically excluded, and often pays replacement cost.
Details vary, but the general rule is: the broader the form, the fewer surprises at claim time.
What does landlord insurance cover?
- Dwelling and other structures: the rental home, detached garage, fences, and sheds.
- Fair rental value (loss of rents): income you lose while the home is being repaired after a covered loss.
- Landlord liability: protection if a tenant or visitor is hurt because of a problem with the property. It may be included or added separately.
- Landlord’s personal property: items you keep there to maintain or furnish the home, like appliances, subject to limits.
What it typically doesn’t cover
- Your tenant’s belongings. Tenants need their own renters policy.
- Flood and earthquake.
- Wear and tear or deferred maintenance.
- Extended vacancy. Many policies restrict coverage if the home sits vacant beyond a set period, often around 60 days.
- Vandalism and theft may be limited or require an endorsement on some forms.
Owning rentals in the Nashville area
Middle Tennessee has plenty of rental activity, from investors buying in growing suburbs like Spring Hill, Murfreesboro, Lebanon, and Gallatin to families keeping a first home in Donelson or Columbia as a rental. Spring storms, hail, and wind are a real risk here, and a DP-1 form may provide far less protection for wind and hail than a broader form. If you’re comparing quotes, make sure you’re comparing the same form.
If you host short-term guests through a platform like Airbnb or VRBO, tell your agent. Short-term rentals often need a specific endorsement or a different policy, and local short-term rental rules are separate from insurance, so check with your city as well.
5 costly mistakes new landlords make
- Keeping the homeowners policy after tenants move in. It may not respond to a claim on a rental.
- Choosing the cheapest form without reading it. A basic form may leave out common perils.
- Skipping loss of rents. Your mortgage payment doesn’t stop just because the house is being repaired.
- Not requiring renters insurance. Your policy typically won’t cover your tenant’s things or their liability.
- Ignoring vacancy rules. Between tenants or during renovations, check your vacancy clause.
Do you need an umbrella too?
Landlords face liability claims like slips, falls, and injuries tied to property conditions. A personal umbrella policy can add extra liability on top of your landlord and auto policies, as long as the required underlying limits are in place.
What to do when something goes wrong at a rental
When a tenant calls about a fire, storm damage, or a burst pipe:
- Confirm everyone is safe and that emergency services have been called if needed.
- Prevent further damage with reasonable steps, like shutting off water or tarping a roof, and keep receipts.
- Document the damage with photos and video.
- Report the claim promptly to your carrier or agent.
- Track lost rent if the home becomes unlivable, since loss of rents coverage depends on records.
- Remind your tenant to contact their own renters insurance for their belongings and temporary housing.
Keeping copies of leases, rent records, and maintenance receipts in one place makes claims much easier.
Frequently asked questions
Is landlord insurance required in Tennessee?
State law doesn’t generally require it, but if you have a mortgage on the rental, your lender will likely require coverage on the property.
What’s the difference between landlord insurance and homeowners insurance?
Homeowners insurance is built for owner-occupied homes and includes coverage for your belongings. Landlord insurance focuses on the structure, lost rent, and landlord liability.
Does landlord insurance cover tenant damage?
It depends on the policy and the cause. Some sudden, accidental damage may be covered; intentional damage or vandalism may be limited or need an endorsement. Wear and tear is typically excluded.
Can I require tenants to have renters insurance?
Many landlords include it in the lease. Check with a local attorney or property manager on lease language.
How much is landlord insurance in Tennessee?
It depends on the property’s age, condition, location, policy form, and limits. Broader forms like DP-3 usually cost more than DP-1 but cover more causes of loss.
Next step
Every rental is different. Learn more about rental dwelling insurance with Eric Henry, Insurance Agent, or ask Eric to compare DP-1 and DP-3 options across carriers for your property.
Coverage descriptions are general information only; your policy documents determine actual coverage. Availability varies by carrier.
