Whether you're renting out your first home after a move or own a few doors across the Sacramento Valley, a rental needs a different policy than the house you live in. Here is how landlord insurance works in California, what the forms mean, and where landlords most often get caught short.
Your homeowners policy doesn't cover a rental
A homeowners (HO-3) policy assumes you live in the home. Once you move out and rent it, you need a dwelling-fire (landlord) policy. If you don't change it, a claim can be denied for misrepresenting how the home is used. Tell your agent the day the house becomes a rental.
DP-1 vs DP-3
- DP-1 (basic form) covers a short list of named perils, usually at actual cash value (depreciated). It's cheap, but it leaves big gaps.
- DP-3 (special form) covers the building against all risks except those excluded, usually at replacement cost. This is the form most landlords should be on.
The coverages landlords actually need
- Dwelling set at the cost to rebuild, not the market value
- Loss of rents (fair rental value), which replaces rent while the home is uninhabitable after a covered loss
- Landlord liability, typically $500,000–$1,000,000, because tenants and their guests can sue the owner
- Other structures: fences, detached garages, ADUs
- Ordinance or law, which covers code upgrades required during a rebuild (common with older Sacramento-area rentals)
- An umbrella across all your properties once you own more than one
Your tenants' belongings are not covered by your policy. Require renters insurance in the lease.
Situations that change the policy
- Vacancy. Many policies limit coverage after 30–60 days vacant. Tell us before a long turnover or renovation.
- Short-term rentals (Airbnb/VRBO). These need a policy written for short-term rental use. A standard DP-3 may exclude it.
- ADUs and room rentals. Renting a room or an ADU on the property you live in is handled differently from renting a whole house.
- Wildfire-area rentals. When admitted carriers decline, the FAIR Plan writes dwelling fire for rentals, paired with a DIC or a separate liability policy. Non-admitted DP-3 is often a better option.
How we shop rental properties
Send us the address, year built, roof year, rent amount and your current policy. We compare DP-3 options across carriers and, if you own your home and auto with us, check whether a multi-policy discount beats separate carriers.
Frequently asked questions
Does homeowners insurance cover a house I rent out in California?
No. Once the home is rented, you need a landlord (dwelling-fire) policy. Keeping a homeowners policy on a rented house can lead to a denied claim. Switch the policy when the first tenant moves in.
What is the difference between DP-1 and DP-3 insurance?
DP-1 covers only named perils, usually at actual cash value. DP-3 covers the building on an open-perils basis, usually at replacement cost, and typically adds loss of rents and other protections. DP-3 is the form most California landlords should have.
How much does landlord insurance cost in California?
It depends heavily on the home's rebuild cost, age, roof, location and wildfire score. A landlord policy usually costs somewhat more than a homeowners policy on the same house because rentals have more claims. The fastest way to know is a side-by-side quote.
Do I need special insurance for an Airbnb?
Usually yes. Short-term rentals are often excluded from standard landlord and homeowners policies. You need a policy or endorsement written for short-term rental use, with liability limits that fit guest traffic.
Can I get a landlord policy if the property is in a wildfire area?
Yes. If admitted carriers decline, non-admitted DP-3 policies and the California FAIR Plan (with a DIC or separate liability policy) are both options. We compare them for you.
Terry Bagwell Insurance Agency · 1100 Melody Lane, Ste 2004, Roseville, CA 95678 · 916-878-5160 · CA DOI License #0D85121. This guide is general information, not a policy or a promise of coverage; read your policy for exact terms.FAIR Plan figures are from the California FAIR Plan Association and the California Department of Insurance as of the review date.
We're an independent agency in Roseville. We shop multiple top-rated carriers, and we'll tell you straight if what you have is already the best available.