How Much Insurance Coverage Should You Purchase?
Updated 8 days ago (March 6, 2026)
The higher the insurance coverage, the higher the premiums. You should purchase enough insurance to cover the cost of rebuilding should that become necessary. The rebuilding cost may be higher than the actual value of your rental units and consist of (1) local construction costs, such as exterior wall construction costs and the design cost; (2) the price of your rental units, such as the number of bathrooms and other rooms, the materials used and the type of roof; and (3) attached fixtures, such as garages, fireplaces, or arched windows. However, as a landlord, you do not have to insure the total value of real estate because your land will not burn. The consideration is particularly important when your property is located on a valuable land.
Since the cost of local construction, the price of your rental units, and the price of other property may increase consistently, it's important to conduct a new value assessment every few years. You may want to seek support from your insurance company on this.
Legal Disclaimer: Tellus provides this content for informational purposes only. This is not legal advice. Laws vary by state and locality, and regulations may have changed since this article was published. Consult a qualified attorney for guidance specific to your situation.
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