Landlord vs Homeowners Insurance 2027 Comparison

Renting out your home requires switching from HO-3 (homeowners) to DP-3 (dwelling fire / landlord) — your homeowners policy DOES NOT cover tenant-occupied properties. This 2027 calculator compares the cost difference and coverage swap.

Why You CAN'T Keep Your HO-3 On A Rental

Standard HO-3 homeowners policies are designed for owner-occupied homes. The policy declarations and underwriting assume you (the insured) live there. Renting it out is a material change in risk — failure to disclose voids coverage. After a fire or liability claim, the carrier will investigate; if they find tenants, they deny the claim. The savings of "keeping HO-3" disappear on the first claim. Switch to DP-3 (Dwelling Property — Special Form) the day a tenant moves in.

DP-3 (Landlord) vs DP-1 (Basic)

DP-3 (Special Form): open-perils — covers any cause of loss except listed exclusions. Replacement cost on dwelling. Loss of Rents included. The gold standard for rental properties. DP-1 (Basic Form): named perils only (fire, lightning, explosion, vandalism). Actual cash value (depreciated payouts). Cheaper but dramatically less protective. DP-2 (Broad Form): middle ground — more perils than DP-1, replacement cost on dwelling. Most landlords should buy DP-3.

Coverages To Add To Your DP-3

Require tenant renters insurance in the lease — costs them $15-$25/month, protects their belongings, includes liability coverage that's primary if they cause damage to others. Personal umbrella with rental endorsement — adds $1M+ liability above your DP-3 limits. Critical for landlords. Equipment Breakdown — covers HVAC, water heater, electrical failures (often excluded from DP-3). Service Line — covers buried utility lines on your property. Vacant Property if rental sits empty 60+ days during turnover.

Landlord Insurance Mistakes That Void Claims

(1) Keeping HO-3 after tenants move in — material misrepresentation; claims will be denied. Switch to DP-3 the day they move in. (2) Not requiring tenant renters insurance in the lease — tenant damage to neighbors becomes your liability; renters insurance gives you a target to subrogate against. (3) Forgetting the vacancy clause — most DP-3s exclude losses if vacant 60+ days. During turnovers, contact your agent to add vacancy coverage. (4) Missing the loss-of-rents coverage — without it, you lose rental income for months while repairs happen.

Last updated May 2026. Sources cited in tool output.