The State of Florida is one of the best places to invest in rental properties, driven by the growing economy, the large population, the significant share of renters, the excellent rental rates, and the landlord-friendly legislation.
However, The Sunshine State is among the 10 most natural disaster-prone states in the US market. This means that savvy investors need to get proper landlord insurance in Florida in order to protect their investments from floods, storms, hurricanes, fires, and others.
The rest of this article will look at the types of coverage available to local property owners, the best insurance companies in the market, the average costs, and the factors you should consider when choosing the right policy.
Why Landlord Insurance in Florida Is Essential
While rental property insurance is not legally required in the US housing market, there is a long list of reasons why this is a must for smart and profitable investments. This holds more true than ever for the Florida real estate market, which experiences one of the highest rates of natural disasters nationwide.
Understanding the Florida Rental Market
Before we dive into the ins and outs of landlord insurance in Florida, let’s take a quick look at the local rental market to understand some of the dynamics which necessitate additional protection.
Following is November 2023 data from Mashvisor, the best comprehensive provider of residential real estate data and analytics in the United States.
- Median Property Price: $750,676
- Average Price per Square Foot: $477
- Listings for Sale: 94,970
- Days on Market: 91
- Monthly Long Term Rental Income: $2,986
- Long Term Rental Cap Rate: 3.45%
- Long Term Rental Cash on Cash Return: 3.40%
- Price to Rent Ratio: 21
- Monthly Short Term Rental Income: $3,327
- Daily Short Term Rental Rate: $191
- Short Term Rental Occupancy Rate: 55%
- Short Term Rental Cap Rate: 3.02%
- Short Term Rental Cash on Cash Return: 2.98%
- Walk Score: 49
Property prices are relatively high in the Florida real estate market, at more than double the national average of $348,539, as reported by Zillow. As Florida investment properties are rather expensive, owners need to make sure they are well protected as having to fix and repair them out of pocket will incur a major cost.
Moreover, based on Mashvisor data, both traditional and Airbnb properties bring a good ROI. Thus, landlords need to do everything possible to safeguard their investment and its profitability, including getting the right insurance coverage.
Risks Faced by Landlords in Florida
No doubt, investing in The Sunshine State comes with many important benefits. However, this is also one of the riskiest locations for real estate investments. While property crimes including burglary and theft are less frequent in Florida than in the rest of the US (based on data from NeighborhoodScout), this cannot be said about natural disasters.
MoneyGeek looked at the Federal Emergency Management Agency (FEMA) data on disaster declarations from the past 20 years and concluded that Florida ranks as #8 among the most disaster prone US states. Since 2003, the state has experienced a total of 72 disasters including 34 hurricanes, 18 wildfires, and 12 severe storms.
Luckily for Florida real estate investors, these are all potential sources of loss that are included within Florida landlord policy in one way or another, whether in the standard coverage or as add-on options. What matters is that you get the best landlord insurance in Florida as soon as you buy your investment property, before you even start renting it out.
We will show you how to do that.
Types of Rental Property Insurance Policies in Florida
When it comes to coverage, standard local policies offer similar real estate investment protection to other states.
Florida rental home insurance is conventionally divided into three types:
- D-1 Policy: Short for Dwelling Policy One Form, this covers property damage to the main structure from exact perils such as fire. Perils like water and theft, secondary structures, personal liability, and loss of use are not included.
- D-2 Policy: Short for Dwelling Policy Two Form, this protects against more named perils like falling objects, freezing pipes, and theft.
- D-3 Policy: Short for Dwelling Policy Three Form, this is the most comprehensive Florida insurance for rental property, including protection from most perils, replacement cost (rather than actual cash value), liability, and lost rental income.
Following is a more detailed explanation of the items protected by landlord insurance in Florida:
First and foremost, landlord insurance in Florida covers the income property itself as well as attached and detached structures such as garages, sheds, swimming pools, and others. Moreover, the landlord’s personal belongings used in the business – like furniture, appliances, and electronics – are also included. Tenants’ personal property is not as this is typically covered by renters insurance.
The best insurance companies in Florida protect against windstorm, hail, lightning, fire, and water damage in addition to providing unintentional tenant damage coverage.
The second component is landlord liability coverage which includes medical expenses and legal fees in case anyone gets bodily injury on the property. This can be a tenant, a tenant’s guest, a property manager, a handyman, or a contractor.
Personal liability insurance is crucial in the real estate investment business as it can help you save multiple thousands of dollars in medical and legal bills.
Loss of Income Coverage
Most standard policies also act as a loss of rental income insurance, which means that an owner will continue receiving rental income from the company even if their property becomes uninhabitable because of a covered event. This is particularly important for investors looking for positive cash flow properties in an area where the risk of investment being damaged by a natural disaster is high.
Additional Coverage Options
While the above-listed items cover the basics, local investors can choose optional add-ons to further protect their house. Some of the most popular additional coverages of Florida rental property insurance include riot, civil commotion, vandalism, theft, explosion, and damage caused by vehicles. Flood insurance can be added to Florida landlord coverage too due to the frequent hurricanes and storms in the area.
Comparing Florida Landlord Insurance Companies
Selecting the right insurance provider is a major part of the process of getting the best possible policy. The company you work with will determine the coverage, the cost, and the claim process.
The 5 best landlord insurance companies in Florida are:
Steadily: Absolute Best Rental Property Insurance Company in Florida
Steadily ranks easily as the best rental property insurance company in the State of Florida as it was established to focus on and work exclusively with income properties. These include both short term and long term rentals of all types: single family homes, multi family homes, apartments, condos, and manufactured homes, whether occupied or vacant.
Moreover, Steadily has comprehensive coverage and multiple options for additional coverage to meet all the needs of local landlords. Although this is a national company, policies are tailored in line with local requirements. Prices are competitive.
Allstate: Best for Coverage
Allstate is another top choice for investors in the Florida rental market. Though the company does not list the types of homes they insure, their coverage is excellent, with the possibility to choose from many add-ons.
To get a quote, landlords need to contact an Allstate insurance agent.
Farmers Insurance: Best for Add-Ons
Another leading landlord insurance company in the State of Florida is Farmers Insurance. While the provider offers various benefits, the most standing out feature is the opportunity to choose from different optional coverages including but not limited to additional structures, landlord personal belongings, loss of rental income, theft, employee dishonesty, forgeries, counterfeit currency, and others, covered under a business insurance policy.
To learn about the cost of Farmers Insurance, investors have to get in touch with an agent.
State Farm: Best for Florida Apartments
State Farm is also a popular choice among Florida investors who specialize in apartment rentals. The company provides policies that meet all the needs of apartments that are rented out. Coverage is flexible.
To get a quote, property owners have to talk to a State Farm agent.
Liberty Mutual: Best for Discounts
Last on our list of the best landlord insurance companies in Florida is Liberty Mutual. It checks all the boxes. Moreover, it helps investors save on their rental property business operating expenses by offering discounts for bundling, having claims-free history, and using a paperless process.
To get an estimate of the price, landlords should contact a Liberty Mutual agent.
How to Choose the Right Investment Property Insurance in Florida
Selecting the best landlord policy coverage is just as important as getting any coverage at all. That’s why you should carefully analyze the specific needs of your rental and get a clear understanding of what is included and what is not in a policy before signing a contract.
Assessing Your Coverage Needs
The first step in choosing the right landlord insurance policy in Florida is evaluating the needs and requirements of your investment property. Each home is different in terms of type, size, age, condition, structures, and furnishings. What coverage works for a single family home rented out on Airbnb might not work for a condo rented out on a long term basis.
Thus, the exact specifications of your property should be the main factor driving your choice of an insurance company and policy.
Understanding Policy Exclusions and Limitations
Next, you need to be aware of the fact that insurance companies and insurance policies are as different as everything else in real estate investing. Each policy has different coverage, different cost, and different exclusions. It’s equally important to understand what your rental property covers as what it does not cover.
Analyzing and evaluating the specific exclusions and limitations of each company and how they relate to the needs of your property and your market will help immensely in your selection.
The Cost of Insurance for Landlords in Florida
According to data from Steadily, the average annual landlord insurance cost in Florida is $1,722. This is 17% above the national average, mostly because of the higher home values and more frequent natural disasters in The Sunshine State. Furthermore, it exceeds the standard homeowners insurance premium.
Meanwhile, the price can vary widely.
Factors Affecting Insurance Premiums
There are multiple factors that impact the cost of rental home insurance in Florida.
The main ones include:
- Property price
- Rental type (single family home, multi family home, townhome, condo, apartment, duplex, etc.)
- Home size
- Property age and condition
- Additional structures
- Available personal property and its value
- Exact location and local crime rates and disasters
- Claim history
- Purpose (short term vs long term rental): Airbnb insurance tends to cost more than traditional landlord insurance in Florida.
- Dwelling policy (D-1, D-2, or D-3)
- Damage and liability coverage
Tips for Reducing Your Insurance Costs
Florida real estate insurance can add significantly to your rental costs.
But there are certain things that you can do to reduce your premium, such as:
- Install a home security system
- Maintain your property well
- Adjust the coverage to include only what you need
- Increase the deductibles
- Combine multiple policies including homeowners, auto, and other insurances
- Pay premiums annually
- Screen tenants carefully to avoid major damages
- Get insurance quotes from multiple providers
- Make claims only when really necessary
Legal Considerations for Landlords in Florida
When choosing whether to get Florida landlord insurance or not and what type, it’s important to know the local laws and regulations pertinent to rental properties.
Florida Landlord-Tenant Laws
There are no Florida property insurance laws that make rental home insurance obligatory for local real estate investors. This holds true for both traditional, long term and vacation rental properties. Neither local landlord-tenant laws nor Florida short term rental laws require income properties to be specifically insured.
Nevertheless, getting the right coverage is a must in order to protect your property and yourself from losses that might add up to multiple thousands of dollars.
At the same time, landlord insurance in Florida is obligatory in case you finance your income property through mortgage or another loan.
Insurance Requirements and Regulations
In most cases, Florida real estate investors can choose the company and coverage for their rental property based on their needs and requirements. There are no must-have items from a legal point of view, unless you take a loan to buy an investment property.
Claim Process for Landlord Insurance in Florida
The claim process depends largely on the landlord insurance company that you work with.
How to File a Claim
Usually, property owners can file a claim through an online form or over the phone. It is advisable to do this as soon as an event occurs so that you can get the process moving quickly. You will probably need to submit photos that show the exact damage which requires careful and diligent documentation.
What to Expect During the Claims Process
As part of the landlord insurance claim process in Florida, you will need to work with an adjustor who has to visit your property and assess the damage. The adjustor will review your claim, inspect the damage, document the losses, calculate the value of damages, and provide a list of cost estimates.
As a next step, the landlord and the adjustor need to reach an agreement in order to settle the claims related to the structural damage and personal property. In case a settlement cannot be reached, there might be a need to involve the Florida Office of Insurance Regulation to act as a mediator.
Finally, the owner or the insurance company hires a contractor to fix the property.
Securing Your Investment with the Right Coverage
Although it is not legally required, having the right landlord insurance in Florida can make all the difference between operating a rental property business that makes money vs one that loses money. As a result of the geographical location and environment, Florida real estate investments are more prone to the effects of natural disasters than most. However, it is easy to solve this problem and circumvent the need to pay thousands of dollars out of pocket by getting the right policy coverage from the best company.
Is Rental Home Insurance Required by Law in Florida?
No, there is no law in the State of Florida that requires investors to insure their rentals. Generally, local rental laws favor landlords.
Are There Any Unique Environmental Factors in Florida That Affect Insurance for Landlords?
Yes, because of its location and weather, Florida is prone to more natural disasters than other parts of the US, including hurricanes, wildfires, and severe storms. This raises the average costs of insurance.
Can I Get Landlord Insurance If My Florida Property Is in a Flood Zone?
Yes, you can get your rental insured even it if’ts located in a flood zone. But you should keep in mind that landlord insurance does not cover floods. You need to get separate flood insurance.
What Discounts Are Available for Landlord Insurance in Florida?
Florida landlords can benefit from discounts related to safe and well-maintained properties, no previous claims, combining multiple insurances into a single policy, and paying on an annual basis.