Landlord Insurance Guide
Landlord insurance in North Carolina: a complete guide
The dwelling fire policy forms, what coverage you actually need, and the mistakes most landlords make.
Get a QuoteCall (919) 249-8448Why your homeowner's policy won't work
Landlord insurance (also called a dwelling fire policy or DP policy) is for residential rental properties. If you own a home and rent it to tenants, your homeowner's policy no longer applies. Homeowner's policies require the policyholder to occupy the home as a primary residence. Once you rent it out, you need a landlord policy.
The three dwelling fire forms
DP-1, Basic form
Covers named perils only: fire, lightning, wind, hail, explosion, riot, aircraft, vehicles, smoke, vandalism. Pays on actual cash value (depreciated) basis. Cheapest option but provides the weakest coverage. Generally not recommended unless cost is the only concern.
DP-2, Broad form
Covers more perils than DP-1, including building collapse, accidental water discharge, falling objects, and weight of ice or snow. Still named perils, but a broader list. Better than DP-1, still not the strongest option.
DP-3, Special form (recommended)
Open perils coverage, protects against all causes of loss except what's explicitly excluded. Replacement cost available. This is the standard recommendation for most landlords. The premium difference over DP-1 is modest; the coverage difference is significant.
What landlord insurance covers
- •The dwelling structure and attached structures
- •Other structures on the property (detached garage, shed, fence)
- •Landlord's personal property on-site (appliances provided to tenants)
- •Loss of rents if the property becomes uninhabitable due to a covered loss
- •Liability if a tenant or visitor is injured on the property
What it doesn't cover
- •Tenant's personal belongings (their renters insurance covers that)
- •Intentional tenant damage (some carriers offer an endorsement for this)
- •Flood (requires a separate policy)
- •Normal wear and tear
Loss of rents: the coverage most landlords undervalue
If a fire or covered loss makes your rental property uninhabitable while it's being repaired, you lose months of rental income. Loss of rents coverage pays you that income during the repair period, typically up to 12 months at fair market rental value. If your rental generates $2,000/month and repairs take 6 months, that's $12,000 in covered income. Make sure this coverage is included and the limit is adequate.
Tenant damage endorsement
Standard landlord policies don't cover intentional damage by tenants. Some carriers offer an endorsement that covers tenant damage beyond the security deposit. If you're renting to unverified tenants or in markets with higher tenant turnover, ask about this endorsement.
Multiple properties
If you own three or more rental properties, a commercial property policy or blanket policy may be more efficient than individual DP-3 policies for each property. Blanket coverage can simplify administration and sometimes provide better pricing. Talk to your agent when you reach three to four or more properties.
Cooper's take
Most landlords I work with either have no proper coverage (they're relying on a homeowner's policy that won't respond), or they have a DP-1 that severely underinsures them. Get a DP-3 with loss of rents coverage. Include liability at $300,000 minimum, and consider an umbrella policy on top. The premium difference over DP-1 is modest; the coverage difference in a major loss is substantial.
Cooper Parsons, NC License #19272643
Frequently asked questions
What is the difference between a DP-1, DP-2, and DP-3 landlord policy?
DP-1 covers the fewest perils on an actual cash value basis. DP-2 is broader. DP-3 covers all perils except explicit exclusions and pays replacement cost, it's the strongest and most recommended form for most rental properties.
Does landlord insurance cover tenant damage in NC?
Standard policies don't cover intentional damage by tenants. Some carriers offer a tenant damage endorsement. Accidental damage from a tenant (like a kitchen fire) is generally covered as a standard peril.
What is loss of rents coverage?
It pays the rental income you lose while a property is uninhabitable due to a covered loss. If a covered fire makes your rental unlivable for 4 months, loss of rents pays 4 months of rent at fair market value.
Does my tenant need their own renters insurance?
Landlord insurance doesn't cover the tenant's personal belongings. Requiring renters insurance in the lease is a smart practice, it ensures tenants have coverage and reduces disputes over property damage.
Can I use my homeowner's policy on a property I rent out?
No. Homeowner's policies require the policyholder to occupy the home as a primary residence. Renting the property voids coverage for rental-related losses.
Written & Reviewed By
Cooper Parsons
Owner & Licensed Independent Insurance Agent
NC License #19272643 · IronHaven Insurance · Wake Forest, NC · 25+ carriers
“Cooper saved me a TON of money while finding even better coverage for my home and auto. He is a solid person who cares about his clients. I'd rate him 500 stars if I could!”
Elliott Squires
Wake Forest, NC · Home & Auto
“Cooper worked with us when we thought we were all out of options for house insurance. He was able to help us get our home insured with a better package. So thankful for his communication and hard work!”
Rebecca Brady
Wake Forest, NC · Home Insurance
“Cooper is the partner you want to walk alongside you. He is an excellent teacher, a delight to work with. He's earned my trust, and he'll earn yours as well.”
Gabriel Torres
North Carolina · Insurance Client
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