Landlord Insurance for Foreign and Out-of-State Owners

Insurance is the running cost overseas buyers are least equipped to check, and the one sellers are most relaxed about estimating.

I know that because I've checked, and because I've owned US rental properties for ten years. When I priced five properties being marketed to out-of-state investors, the insurance line was where the marketing and the reality parted company most sharply.

It's also the cost most likely to be quietly wrong in a way you won't discover until you claim. Not because anybody lied to you, but because a US landlord policy is built out of a dozen separate pieces, several of them optional, and the cheap quote is cheap for a reason.

1. Why is US landlord insurance so much more than at home?

Because it's priced on a different thing.

A UK landlord policy is priced largely on rebuild cost too, but on housing stock that's mostly brick or block, in a country with no tornadoes, no hail season and no wildfire. American housing in the Midwest markets we buy in is mostly timber framed, often eighty or a hundred years old, and lives where the weather can do real damage.

That weather is getting more expensive, and not only on the coasts where you'd expect. Severe convective storms, which is the industry's term for hail, straight line wind and tornado, caused around $52 billion of insured losses across the US in 2025. That's the third highest on record, and it lands squarely on the Midwest and Mid-South, which is exactly where most rental property investors own.

You can see it in the increasing price of insurance premiums. Home insurance across the US rose about 12% in 2025, and the states in our buy box moved more than that: Kansas and Alabama up 15%, Tennessee and Texas up 14%, Missouri and Ohio up 9%. Premiums are up around 46% since 2021 against 16% general inflation, and non-renewals have risen sharply across every region of the country.

So if you're working from a spreadsheet somebody built two years ago, the insurance line is wrong, and it's wrong in one direction.

If you're coming from the UK, this is one of the two costs you've never paid before. The other is the annual property tax bill, which works nothing like council tax and is set out in how US property tax really works.

2. What kind of policy do you actually need?

A landlord policy, not a homeowner policy.

In the US these are usually written on a dwelling fire form, usually called DP-1, DP-2 or DP-3, rather than the HO-3 form a homeowner buys. The difference matters. An HO-3 assumes the owner lives there. Put a tenant in and you may find a claim declined on that basis alone.

DP-3 is the closest thing to what many overseas landlords would call full cover. Two numbers on two pieces of paper aren't comparable if one is DP-1 and the other is DP-3, and this is the first thing I check on any quote.

3. Why do you insure the rebuild cost rather than the purchase price?

Because the policy pays to put the house back up, and that has almost nothing to do with what you paid for it.

This is the single biggest mismatch between what an overseas buyer expects and how US policies work, and it goes both ways.

One of my quotes covered $314,000 of rebuild on a property with a purchase price of $175,000.

In cheap markets the rebuild figure can be close to double the purchase price, because labor and materials cost what they cost regardless of what the street is worth.

Buy a $70,000 house in Cleveland or Detroit and the carrier will still want to insure $150,000 to $220,000 of structure.

Overseas buyers routinely try to insure to the purchase price, thinking they're being sensible. What they're doing is underinsuring, and on most policies that brings in a penalty that cuts every claim, not just a total loss.

That's also why the number doesn't scale with the deal. A cheaper house is not a cheaper house to insure, and sometimes it's the reverse, because the cheapest stock is the oldest. It's one more reason the very cheap end of the market rarely works, which is the argument in why I buy quality over yield and in what British investors get sold in the USA.

Then there's how the claim settles.

Replacement cost pays to rebuild or repair without deducting for age and wear. Actual cash value deducts depreciation, so a fifteen year old roof is settled at what a fifteen year old roof is worth rather than what a new one costs.

Put numbers on it. On an $18,000 roof claim with a twelve year old roof, actual cash value pays around $6,900 and replacement cost pays around $15,500. That's an $8,600 gap on one claim, and replacement cost often costs 10% to 25% more in premium, so on a $1,500 policy you're paying $150 to $375 a year for it.

I'd rather pay that and have replacement cost, especially on older stock, and especially when I'm four thousand miles away and not in a position to argue about the condition of a roof I've never stood on.

Ask for both quoted. Knowing the gap makes it a decision rather than a default.

Age of stock drives all of this, and it's knowable before you buy. The housing in my two markets is a good illustration: the numbers behind each are in investing in Kansas City real estate and investing in Cleveland real estate, and the older stock is the more expensive to insure.

4. What coverage do you need, and what does each piece cost?

A US landlord policy is a stack of parts. Some come as standard, some are selectable at a limit you choose, and several of the ones that matter most on old housing are optional, and a broker won't add them unless you ask.

Here's the whole stack, with what each piece costs.

Three of those deserve more than a table row, because they're cheap, they're commonly missing, and they're the ones that bite on the housing we actually buy.

Ordinance or law. When a 1920s house burns down, you don't rebuild a 1920s house. You rebuild to today's code. New wiring, egress windows, insulation, sometimes a whole new electrical service. Standard cover is often just 10% of the dwelling figure, and is sometimes left out entirely. Going to 25% costs around 3% of your premium. On a pre-1978 house that's the best value on the whole schedule.

Water and sewer backup. This is the classic old-Midwest claim. Cleveland, Detroit, Kansas City and Indianapolis are full of pre-war housing with basements on combined sewer systems. It's left out as standard, the add-on costs $50 to $150 a year, and the claim runs $20,000 to $50,000.

I've had to replace a sewer line before. It's never cost me less than $15,000. Check the limit is at least $10,000, and that it covers sump pump failure too, which is sometimes sold apart.

Two things you may assume are covered and aren't. Deliberate damage by your own tenant is usually not covered, and the reason is precise. Carriers don't class tenant damage as vandalism, because of the lease. The vandalism cover that pays for a stranger smashing your windows won't pay for a departing tenant doing the same thing. Add-ons exist, but not every carrier sells one. In practice your security deposit is the real cover.

And there's no US equivalent of rent guarantee cover. Loss of rent pays when the house is uninhabitable after a fire or a storm. It doesn't pay because a tenant stopped paying. That's a different problem entirely, with its own options and costs, in when your US tenant stops paying.

One more thing that costs you nothing. Require renters insurance in the lease. You can do this in every state, it costs your tenant around $150 a year, and their liability cover pays first if they carelessly start a fire.

Ask to be named as an interested party so you're told if it lapses, and have your manager check it at every renewal. A requirement nobody verifies is worthless, which is one of the things I'd ask about in how to vet a US property manager.

One of my property managers in Cleveland requires tenants to pay a small monthly fee for a full service package. It includes renters insurance, and credit reporting for on-time rent payments, which helps good tenants build their credit score.

5. What is the wind and hail deductible, and why does it matter so much now?

Read this line before you look at the premium. It's changed sharply in the last three years.

Your policy doesn't have one deductible. It usually has two or three: an all other perils deductible, a separate wind and hail deductible, and in some southern states a named storm deductible on top. Those apply in 19 states and Washington DC, though of our markets only Atlanta, Birmingham and Dallas sit in one, and all three are far enough inland that it rarely bites.

The wind and hail one used to be a flat sum, often $1,000 to $2,500. It's now usually a percentage of your dwelling figure, and the difference is not small.

Percentage deductibles are most common across Tornado Alley and the Midwest: Texas, Oklahoma, Kansas, Nebraska and now Ohio. Measured across the market, the average wind and hail deductible runs about 2.2% of dwelling cover in Texas and around 1.4% in Kansas.

Then there's the second change, which matters even more on the housing we buy.

Carriers are moving old roofs to depreciated settlement. Carriers with named thresholds in the Midwest market include Progressive at 11 years old, Erie at 10, Westfield at 10, and Auto-Owners at 16 unless you buy the endorsement back. Past that age a roof claim settles at depreciated value even on an otherwise replacement cost policy. Carriers now check roof age from aerial and satellite images rather than taking your word on the form. There's no arguing about it later.

And the lender pressure that used to force full replacement cover on roofs has gone. Fannie Mae and Freddie Mac now permit depreciated roof cover on conforming loans.

Put those two changes together on a real property. A 1950s Kansas City house with a fourteen year old roof, quoted in 2026, is likely to carry a 1% or 2% wind and hail deductible and a depreciated roof schedule. A hail claim on that policy can pay close to nothing.

Check this before you close. It takes five minutes, and it's the most important thing on the page. Ask two questions: what's the wind and hail deductible, as a percentage and in dollars, and does the roof settle at replacement cost or depreciated value given its age.

If the answer is bad, the fix is usually the roof rather than the policy. A property needing a roof in two years is a different deal from the one in the pro forma, which is why roof age belongs in the turnkey due diligence checklist alongside the numbers, and in the capital planning in maintenance, repairs and capital.

This is also why I focus almost exclusively on renovated properties with brand new systems, including sewer lines and a new roof. Sure, I pay more, but I'm looking to buy assets, not liabilities.

6. Do you need flood cover?

Standard policies exclude flood everywhere, without exception. It's a separate decision and it's about the property, not the state.

Flood cover comes through the National Flood Insurance Program or a private carrier. The federal program covers up to $250,000 of building and $100,000 of contents, which is enough for the housing we're discussing. It runs about $976 a year on average, or roughly $1,114 in a high risk zone and $745 outside one.

Three things to know before you buy.

Check the zone before you offer, at the FEMA Flood Map Service Center. Zones starting with A or V are Special Flood Hazard Areas, and cover is mandatory if you're borrowing.

Zone X is not zero risk. About 29% of federal flood claims come from houses outside high risk areas. Memphis has floodplain running through ordinary residential streets, and so do parts of Kansas City and Dallas.

There's a 30 day waiting period, unless you're buying the policy as part of a purchase with a mortgage, in which case it starts at closing. You can't buy flood cover when the forecast turns.

One more thing worth knowing if you're modeling a buy and hold rental property investment. Federal flood pricing moved to per-property rating in 2021, and rises are capped at 18% a year until each house reaches its true rate. Plenty are still climbing. A quote today may not be what you pay in five years.

7. What did five real properties cost to insure?

Real quotes, obtained in July and August 2026, on five properties then being marketed to out-of-state investors.

Two figures from that exercise are worth carrying around. The quotes ranged from $1,171 to $2,210 a year, on modest single family houses. And one seller's own advertised figure was $780, against my quote of $1,647 on a comparable house in the same city.

I'm not accusing anybody of anything. It wasn't the same house, and insurance varies street by street like everything else. But a pro forma is a marketing document and a quote is a price. The full workings on all five, including the tax records, are in the best buy to let markets in the USA.

In my experience, some turnkey sellers will get a quote based on the cheapest possible policy. It's a real quote, but it isn't the one you want. It just makes the cash flow look better on a spreadsheet. In reality, that could cost you tens of thousands of dollars when it comes time to make a claim.

The Kansas City and Cleveland pair is the one I'd sit with. Same price, same rent, same headline yield, and $436 a year of difference in what you keep, entirely because one city's houses cost more to insure. That's the whole argument for checking. Daniel, one of my clients in Germany, owns in both, and his purchase is in his case study.

8. What is the vacancy exclusion?

The clause I'd read twice, because it bites exactly when a remote owner is least attentive.

Most policies restrict or void cover once a property has been vacant for a set period, usually 30 or 60 days. What gets suspended is exactly what an empty house suffers: vandalism, broken glass, water damage, theft, and sometimes liability too. Some policies drop back from open perils to a short named list.

Note the line carriers draw. Unoccupied means the tenant is away but intends to return and their things are still there. Vacant means nobody lives there and there's not enough furniture for it to count as lived in. Between tenants, with the place cleared, is vacant.

Now put that next to the rest of the operation. A turnover with a make ready can easily run past 30 days, and a slow letting takes longer still. So the ordinary rhythm of owning a rental can quietly take you outside cover, and nobody will mention it until you claim. The textbook denied claim is copper stripped from an empty house in Cleveland, Detroit or Memphis at day 35. I've had that happen. It cost me dearly.

Two things to do. Ask what the vacancy period is and get it in writing. And tell your insurer when a property is going to be empty, because a vacancy permit is cheaper and simpler than moving to a separate vacant policy, which runs one and a half to two times a normal premium.

Make it your manager's job to tell you the day a unit goes vacant. The costs and timeline of a turnover are in what a turnover actually costs, and how long an empty property should take to let is in how long should a vacancy take.

The worst version is buying a distressed house, holding it empty through a ninety day rehab, and not telling the carrier. That's where a fire or a theft claim gets denied outright.

9. What does an LLC on the deed change?

The name on the policy, and it has to match the name on the deed.

Almost every foreign buyer holds through a US LLC or similar US legal entity. If the property is owned by the LLC, the policy should be in the LLC's name, with you added where appropriate, your lender named as mortgagee, and possibly your property manager as well. A policy in your personal name on a property owned by an entity is the kind of mismatch that gets discovered at claim time.

There's a second entity trap people miss. Moving money between you and a foreign owned US LLC is reportable, and paying an insurance premium from the wrong account is exactly the kind of transfer that gets forgotten at year end, which matters because of the filing in the $25,000 form nobody mentions.

Tell your insurer if ownership changes, including when you transfer a property into an entity after buying in your own name. It's a five minute call that saves the whole policy. The entity setup itself, and the order it has to be done in, is in set up to borrow.

Your lender will also require cover at a level they set, and they'll check it annually. Insurance is one of the running costs a DSCR lender underwrites when they size your loan, which I explain in DSCR loans explained.

10. How much liability cover is enough?

Standard landlord policies usually carry $300,000 or $500,000 as a default. Going to $1,000,000 often costs $50 to $150 a year, which makes it the cheapest thing on the schedule per dollar of cover. I'd take it on every property.

Once you own several properties, an umbrella policy sitting above them all is worth pricing. Expect $200 to $500 a year for the first million, then $75 to $150 for each million after that. Carriers normally want $300,000 or $500,000 of cover in place under it first. Check the umbrella doesn't exclude rental activity, because plenty of personal ones do unless your houses are listed on it.

One thing to ask about on old housing: whether lead paint is excluded or capped low. On pre-1978 stock in Cleveland, Detroit, Birmingham and Memphis that's a real risk, and it's often carved out.

I wouldn't treat the LLC as doing this job for you. An entity and a policy guard against different things. The mistake I see most is an owner assuming the LLC removes the need for cover. The structure conversation is in how to structure your US property investment.

11. How do you check a quote before you accept it?

Twelve things, and they take one reading of the declarations page.

The form, DP-3 rather than DP-1.

Replacement cost rather than depreciated settlement.

The dwelling amount, and whether it reflects a real rebuild figure rather than your purchase price.

Extended replacement cost, at 25% or more.

Ordinance or law, at 25% or more on anything pre-1978.

Then the deductibles, all of them. The all other perils figure, the wind and hail figure as a percentage and in dollars, and the roof settlement clause given the roof's age.

Then the pieces people forget.

Water and sewer backup, at $10,000 or more.

Loss of rent, and for how many months.

The vacancy period.

Liability at $1,000,000, with lead paint checked. And whether the named insured matches the deed.

Ask for the declarations page, not a summary email. All of it is on there.

Where the property came through a turnkey seller, the insurance line deserves the same treatment as the rent and the tax figure. Check and verify.

Then put the real premium into your own numbers rather than the seller's. Insurance sits alongside management, maintenance, capital and turnover as one of the costs that decide whether a rental works, and you can put your own figures through my free rental property cash flow calculator with the real number in place. The rest of the running costs are in what US property management actually costs.

The bottom line

Insurance is boring, it's a few hundred dollars a year of difference between doing it well and doing it badly, and it's the line most likely to be wrong on the sheet you were sent.

Three things are worth doing every time.

Get your own quote before you commit, because five minutes of work turned a $780 estimate into a $1,647 price on one of the properties I checked.

Read the deductible section, not just the premium, because a 5% wind and hail deductible with a depreciated roof schedule is a policy that will not pay for the most likely claim you'll ever have.

And spend the small money on the cheap endorsements. Ordinance or law, water backup, extended replacement cost and a million of liability together cost a couple of hundred dollars a year and cover the four things most likely to turn a bad afternoon into a bad year.

None of that will make you money. It will stop one event from taking a year of returns with it, and over a long enough hold, that's the same thing.

If you'd rather have the cover reviewed alongside everything else on a property, that's part of what our remote management service covers, and the pre-purchase checklist is in the foreign investor starter kit. The standard I hold the whole operation to is in what good remote management looks like.