Arizona has one of the fastest-growing populations in the US- and a booming rental market to boot. It also has some of the lowest property taxes and most landlord-friendly laws, so it is no surprise that this state is a hot pick for buying investment property.

If you own a rental property in Arizona, landlord insurance cover can help you protect yourself from financial losses if sudden or unexpected damage occurs.

This comprehensive guide to landlord insurance, what it covers, how much it costs, and where to get it has all the information you need to get started.

The Cost of Rent and Landlord Insurance in the US

Before we talk about Arizona, let's take a quick look at rental prices and landlord insurance costs nationwide. It is important to remember that both of these things vary significantly, and the national averages do not necessarily represent what you should expect to pay.

Overall, the average cost of landlord insurance in the US is around $2,100 per year.

Comparatively, renters pay an average of almost $1,400 per month, but the national median including current listings is closer to $2,000.

What Is Arizona Landlord Insurance?

Arizona landlord insurance is a policy designed to protect rental property owners from financial losses following various types of damage.

Also called rental property insurance, these policies are tailor-made for those who own or manage rental properties and need coverage in case an unforeseen circumstance (involving their tenants or the perils of nature) leaves them with hefty expenses they can't cover alone.

There is no law that says you are required to have landlord insurance in Arizona- but most insurance companies won't cover you with a homeowners insurance policy if you have paid tenants living on your property.

It is also a requirement with most mortgage lenders if you plan to use a loan to purchase your investment property.

Regardless of the laws, it is highly recommended that every landlord has rental property insurance.

Landlord Insurance VS Homeowners Insurance: What One Do You Need?

There are many similarities between landlord insurance and homeowners insurance, which is why the two are often confused. However, knowing which one you need is usually quite simple.

In most cases, anyone who lives in the property they own needs homeowners insurance- but if they rent their property to someone else, they should take out a landlord insurance policy instead.

The differences lie with the coverage options. Landlord insurance offers a few extras that only apply to rental property owners, and it usually costs a little bit more than standard home insurance.

What Does an Arizona Landlord Insurance Policy Cover?

Every policy is different, and your exact coverage will vary depending on what company you choose and the specific insurance you request.

That said, there are a few basics that should be a must-have in any landlord insurance policy.

Property Damage

Dwelling insurance is the umbrella name given to the coverage for structural damage to your property. It pays to rebuild or restore your rental property after sudden or unexpected damage.

Make sure you have enough coverage to pay for the complete reconstruction of your home in case the worst should happen, and look into what is included as a covered event.

Most policies will automatically cover fire and severe wind or storm damage, but extras such as flood, hurricane, and earthquake damage are usually offered as optional extras.

Luckily for Arizona property owners, the overall risk of these extreme events is low compared to many parts of the country- but it is still worth considering natural disasters protection as part of your dwelling coverage if you live in a potential risk area.

Your Personal Belongings

Many landlords provide furniture, appliances, and other items in their rental properties for tenant use. If something happens and these items are damaged, insurance pays to replace them.

It is important to note that only property belonging to the policyholder is covered.

Landlord Liability Insurance

Liability protection covers the cost of legal fees and medical payments if you are found liable for an injury sustained on your property.

Some policies also include legal liability insurance for tenant disputes that end up in court, including evictions and intentional damage lawsuits.

Lost Income Coverage

Landlord insurance helps protect you against the loss of rental income if your property becomes uninhabitable. There are usually limitations, and the amount of coverage varies.

Guaranteed rental income insurance is the best coverage option, but usually costs a little bit more on top of the standard premium.

What Does Landlord Insurance Not Cover?

While there are many things you can add to your landlord insurance policy at an extra cost, there are some things that are simply not covered by this type of insurance in general. These are the three most important things to know about.

Intentional Damage

Damage caused maliciously or intentionally by you or your tenant is not covered by insurance. If a tenant causes damage on purpose, you need to file a lawsuit against them to recover the costs of repairs.

If you have legal liability insurance, it should help pay for the legal costs associated with the lawsuit, but not the damage itself.

Your Tenants' Belongings

Only items that the policyholder owns are covered under landlord insurance. Your tenants' personal property is not.

They should take out their own renters insurance policy to protect their belongings. It is fairly normal for landlords to make this a condition of the lease agreement.

Maintenance and Wear and Tear

You are responsible for the general upkeep of your property and any appliances you provide. If something breaks due to wear and tear, your landlord insurance won't pay to fix it.

Furthermore, if damage is caused because of a broken appliance that you did not repair or maintain efficiently, you may not be able to claim back the money through insurance.

Make sure you stay up to date with maintenance on HVAC systems, washing machines, and other major appliances that could cause you problems later. It is not only best practice as a landlord- but it also helps you avoid unnecessary expenses.

Why Do Arizona Rental Property Owners Need Landlord Insurance?

There are many situations where landlord insurance policies are a huge help.

People often question whether or not it is worth insuring their rental properties, but there is really no question at all.

Unless you have the means to pay for extensive damage to your property and can afford to go without rental income during the repairs process, having landlord insurance is not optional.

Relying on luck is not generally considered a pragmatic business decision- especially not when it comes to your financial well-being. All kinds of situations can leave landlords out of pocket and in a difficult position if they don't have insurance coverage.

Here are a few key examples.

  • Covering medical payments after an accident on your rental property

Because of premises liability laws, landlords are exposed to potential legal fault depending on what causes the injury. Medical bills can quickly become very expensive, so having this type of coverage is important.

One example of when you could need landlord liability coverage is if someone is injured because they slip on water leaking from an old appliance that you failed to replace.

  • Paying to rebuild your property after a natural disaster

Arizona has a relatively low risk of natural disasters, but it is not entirely immune to them. Wildfires, flash floods, severe storms, and even earthquakes have been known to hit the state, and if they do, your property could sustain significant damage.

If you have the right coverage, insurance will pay to rebuild your property and restore it to its original condition. Policy limits vary, but you can usually secure coverage for most of the replacement cost.

  • Financial support after other unexpected events

Natural disasters are not the only thing that can cost you a lot of money. House fires, sudden water damage from a burst pipe, or theft and break-ins can also leave you out of pocket and in a difficult position.

Your insurance can help pay to repair the damage and cover the lost income during periods when the property is uninhabitable- as long as it is a covered event.

What Is the Cost of Landlord Insurance in Arizona?

The good news for Arizona rental property owners is that the average cost of landlord insurance in the state is significantly lower than the national median.

Because of the generally affordable housing a relatively low risks, the average landlord in Arizona pays around $1,050 per year for their policy (less than $90 per month).

Remember, this figure should not be used as a guide for what you should expect to pay. Prices vary between properties, cities, and companies, and a lot of it will depend on how much coverage you need.

How Are Landlord Insurance Costs Calculated?

Your landlord policy price depends on many things, but it boils down to three primary categories.

Property Value

The more valuable your property is, the more it would cost to rebuild it if disaster were to strike. More valuable properties need higher coverage limits, and they pay more for their premiums to cover that.

Some of the things that go into determining your property's value for the purpose of calculating an insurance quote are:

  • Its size
  • How many bedrooms and bathrooms it has
  • Whether or not there are any additional structures
  • How old it is
  • The current condition of the property
  • Whether or not there have been any upgrades made

Coverage Requirements

Other than the dwelling insurance, the add-ons and extras you want or need also contribute to the overall cost of Arizona landlord insurance.

It will cost less if you opt for a basic package with no additional coverage for special events. Those who want extended replacement cost coverage, extra liability insurance, flood insurance, guaranteed rental income, or other extras can expect to pay more.

Risk Factor

Insurance companies take a risk by insuring your property. The higher that risk is, the more they charge- it is that simple.

Luckily, most of Arizona is relatively low risk, but there are still some factors to consider.

Properties in areas with a higher likelihood of wildfires, floods, or severe storms cost more to insure- as do properties in zones with higher crime rates.

Older properties with weaker or less storm-resistant materials are also charged at a higher premium.

Your credit history is also taken into account. A poor credit score suggests a higher risk for the investment company- so they may charge more.

How Can Arizona Landlords Save Money on Their Rental Property Insurance?

Based on the above factors, it is possible to reduce your costs.

Let's start with coverage. You will pay less if you have lower coverage limits and pay a higher deductible (the amount you need to pay yourself before insurance kicks in. That said, this is risky, as it leaves you with more out-of-pocket expenses and less financial protection.

If you don't want to compromise the level of protection you have, you could try the following money-saving tips.

Upgrade Your Property's Safety and Security

Reduce your costs by reducing your risks.

Most insurance companies offer lower rates for properties with security systems such as smoke detectors, security cameras, and alarms. This is especially beneficial if you manage a multi-unit apartment building.

Another way to save money on your monthly premium for landlord insurance is to make storm mitigation efforts. Reinforcing your roof, windows, and doors can earn you a discount- and reduce the likelihood of your property being damaged in the first place.

Rectify Potential Issues Before the Inspection

A property inspection is almost always required before a final quote is given. This is to establish the condition of your property and look for potential issues that could lead to a claim.

It is worth investing a little time and money to get your property in the best possible condition before the inspection, and it could get you a lower rate and save money in the long run.

Invest in Newer Properties

If you are still thinking about investing in Arizona rental property, it may be worth buying new builds (three years or less), as they are usually cheaper to insure.

Some companies also offer discounts for new buyers, regardless of the age of their property.

Screen Your Tenants

Although tenant screening may not always reduce your rates initially, it can reduce your likelihood of having to make some types of insurance claims. DoorLoop helps landlords efficiently screen tenants to find high-quality, low-risk candidates.

Pay Annually Instead of Monthly

Another way to save money (depending on the company you choose) is to pay your insurance annually via autopay. This can save you quite a lot of money over the years.

Look Into Other Discounts Available

Every insurance company is different, and the discounts available vary between providers. It is worth doing a little research when searching for the right company to see what deals you qualify for at each one.

Discounts range from claims-free bonuses, family discounts, and loyalty rewards to discounts for certain roofing materials, eco-bonuses, and fire protection.

Five of the Best Landlord Insurance Companies in Arizona

  • Insurance Brokers of Arizona

Insurance Brokers of Arizona is an insurance agency that represents more than 40 leading insurance providers. Although it does not provide coverage directly, it is an excellent place to compare quotes and find a company that is a great fit for your rental properties.

  • Geico

Geico is a well-known landlord insurance provider in Arizona- offering versatile coverage with plenty of option add-ons to enhance your policy. You can start a free landlord insurance quote online or speak with an Arizona sales agent directly about insuring your properties.

  • Baselane

Baselane is one of the best places to find a landlord insurance policy in Arizona. The company works in several states to provide affordable, generous cover that is tailored to rental property owners.

It is fast and easy to get a quote online, and the company will customize the offering based on your property and its requirements.

  • Steadily

Steadily is a highly rated and reputable landlord insurance company that works in most states- including Arizona. It offers excellent, versatile coverage at affordable rates for all kinds of rental properties.

You can also use Steadily to insure short-term rental properties- such as AirBNBs. The website is informative, easy to follow, and transparent about policies and prices.

  • State Farm
State Farm

State Farm is one of the largest insurance companies in the USA, with a solid reputation and outstanding financial stability rating to back it up. The policies are comprehensive, great value for money, and can be customized to meet your every need.

Because of its size and status, insuring your rental property with State Farm provides a different type of peace of mind. The customer service is exceptional, and you can work directly with a local agent on any claims.

What Is DoorLoop?

Once you have your landlord insurance in order, the next step is to find the best tool to optimize your rental property business and make your job easier.

DoorLoop is the solution you need.

In short, DoorLoop is an all-in-one property management software that takes the hassle out of being a landlord and gives you more control over your portfolio and day-to-day tasks.

It provides a streamlined, sophisticated, and simple way to manage your properties, finances, marketing, and tenant communications- all in one user-friendly platform.

Whether you have one or two properties you rent out or you manage a portfolio with hundreds of units, DoorLoop can make a difference to your business- taking care of the mundane tasks and leaving you more free time to focus on the important things.

Here is a taste of some of the ways DoorLoop could help you.

  • It lets you collect rent on autopilot with an automated online payment collection system.
  • Renters can submit requests, pay rent, and communicate with you via a tenant portal.
  • You can handle all maintenance requests and processes through the platform to reduce the time spent on the phone and searching through texts and emails.
  • DoorLoop helps you design and customize your own application site where prospective tenants can view and apply to rent your properties.
  • Integrations with leading listing sites Zillow and Trulia make marketing your vacancies easier- and boost your chances of finding a tenant.
  • Screen all applicants using DoorLoop's advanced searches and background check tools.
  • You also have access to a full suite of accounting software and helpful integrations with other programs.

This is just the beginning- DoorLoop offers much more and can support your rental property business every step of the way.

If you are interested in finding out more or seeing for yourself how the platform works, you can schedule a free demo to get things started.

Final Thoughts

Arizona may have a relatively low risk of natural disasters than most of the country, but it is not without risk. The unexpected can- and does- happen, and without landlord insurance, your rental property business (and personal finances) could seriously suffer.

The cost of landlord insurance in Arizona is significantly lower than the national average- and a small price to pay for peace of mind and financial protection.

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!