New Jersey has a booming population in comparison to its modest size. As a popular commuter state to New York and Philadelphia, the Garden State is awash with people looking to rent.

The high demand and constant flow of tenants mean great business for landlords and rental property managers.

It also makes the importance of having adequate insurance for those properties even more prominent.

This handy guide to landlord insurance in New Jersey covers everything you need to know about rental property policies- including average costs, coverage options, and where to find them.

An Introduction to Rental Costs and Landlord Insurance

Many factors impact how much people pay for rental property across the US, and the monthly costs range from a few hundred dollars to tens of thousands.

With that in mind, it is important to take averages and median prices with a pinch of salt.

Based on recent data, the average amount US renters pay is $1,372, but the median asking price for rentals is much higher at close to $2,000.

New Jersey rent prices have been on the rise, and the median currently sits well above the national average at between $2500 and $2900.

Landlord insurance prices are also tricky to put an average on as they depend on so many factors. Overall, the US median insurance cost for rental properties is $2,100 per year.

What Is New Jersey Landlord Insurance?

Landlord insurance is a home insurance policy specifically designed to cover properties that are tenanted rather than owner-occupied. It provides a safety net from disaster and financial losses if the property is damaged, amongst other things.

Homeowners Insurance VS Landlord Insurance

At face value, landlord insurance is essentially homeowners insurance for people who don't live in their properties. This is a fairly basic explanation, but there are a few other differences between homeowners insurance and landlord insurance.

Most landlord insurance policies include coverage options that do not apply to homeowners living on their own property.

What Is Covered by Landlord Insurance in New Jersey?

Insurance policies of any kind are rarely one-size-fits-all, and the coverage you have usually depends on your needs and budget.

Most insurance companies offer customizable policy options to extend or adapt the standard coverage, but it comes at an extra cost.

Let's start with what is always covered by landlord insurance.

  • Dwelling coverage (damage to your property's structure- only if caused by a covered event)
  • Additional structure (rebuild costs for secondary structures such as garages and garden fences)
  • Personal belongings (only the personal property of the policyholder is insured)
  • Landlord liability insurance (to pay medical bills if you are liable for an injury sustained on the property)

Within each category, there are different specifications as to what counts as a covered loss. It is important to check the policy to make sure your main risk points are all included. If not, you can add them on.

Now, here are a few things that are sometimes included but are more often provided as optional extras.

  • Loss of rental income (covered loss of income if rental properties become uninhabitable through excessive damage)
  • Vandalism (damage caused by break-ins or third-party actions)
  • Water backup and pump failure (cover for water damage caused by the pump system)
  • Flood insurance (usually covered under a separate policy)
  • Legal liability coverage (pays for legal costs in tenant disputes)

What Is Not Covered by Landlord Insurance in New Jersey?

A standard rental property insurance policy may be enough for some, but not all. Here are a few notable exceptions that are not included in landlord insurance.

  • Malicious tenant damages (damage the tenant causes on purpose)
  • Tenant belongings (they need a renter's insurance policy for that)
  • General maintenance (upkeep is the responsibility of the landlord)
  • Wear and tear (it does not pay to replace old appliances that break down)

When Does a Landlord Insurance Policy Come in Handy for New Jersey Rental Property Owners, Managers, and Landlords?

  • If you need to evict tenants and the case goes to court, legal liability coverage can help with the expenses.
  • Adding natural disasters protection to your landlord insurance covers your New Jersey property if it is hit by a major storm or other severe weather event.
  • Dwelling coverage can pay for repairs to damaged windows, doors, or locks after a break-in.
  • If a fault in the air conditioning unit leaks and damages the wall, the repairs should be paid for by insurance.
  • A fire breaks out in the apartment you rent out. You need to move your tenants out until the smoke clears- the additional accommodation is usually covered. The replacement cost for the appliances and furniture you provided is also covered.

How Much Is Landlord Insurance in New Jersey?

Insurance coverage costs are very much dependent on the specific needs of the policyholder and the individual risks connected with their property, so there is no set number to expect when looking for a policy.

That said, data collected by Clovered suggests that the state average prices are as follows.

  • $924 annually for a $200,000 property
  • $1348 annually for a $300,000 property
  • $1597 annually for a $400,000 property

How Are Rates Calculated for New Jersey Insurance Policies?

Understanding landlord insurance is a little easier when you break down the factors that go into calculating the cost.

New Jersey landlord insurance rates are calculated based on the following.

  • The size and value of the property
  • The property's age and condition
  • Type of property (multi-family unit, single-family home, condo, apartment, commercial space, etc.)
  • Specific risks for that area
  • Previous claims made by the policyholder
  • How much coverage the client needs
  • What additional protection is included in the policy
  • The deductibles

How to Reduce Costs on New Jersey Landlord Insurance Policies

Now that you know what goes into setting the rates on landlord policies, you may wonder how to lower them. There are a few ways to do it- since many companies offer a range of discounts, offers, and savings.

  • Mitigate storm damage on your property by reinforcing windows, doors, and roofing.
  • Add security features where possible.
  • Find out if you can save by paying annually instead of monthly.
  • Reduce your claims risk by screening your tenants using DoorLoop's features.
  • Be prepared for a property inspection and rectify any potential issues before getting a quote.
  • Bundle multiple policies together.

You can reduce your monthly rate by opting for a higher deductible on your landlord policy. There are pros and cons since you will have more to pay out of pocket before your property coverage kicks in.

Recommended Landlord Insurance Companies Operating in New Jersey

Here are five of the best landlord insurance companies that provide coverage in New Jersey.

Get More Out of Property Management with DoorLoop

Insuring your properties is one part of setting your rental business up for success, but you also need a tool that makes the day-to-day running of things more efficient and convenient.

DoorLoop is an all-in-one solution for landlords and property managers who want to streamline their business and gain better control over their operations.

How does it do that?

In short, DoorLoop takes every aspect of being a business owner in the rental property market and finds intelligent, effective solutions for daily tasks and integral practices.

What Does DoorLoop Offer?

Here are some examples of DoorLoop features that support Landlords across the country.

  • Automated payment reminders
  • Online rent collection
  • Easy-access tenant portal for better communication
  • Tenant screening and application management
  • Customizable application website
  • Personalized marketing through leading listing sites
  • Online maintenance portal for managing requests quickly
  • Full suite of accounting tools

The list goes on. It doesn't matter if you only manage one or two properties or have a multi-city portfolio packed full of units- DoorLoop can help.

See for yourself by scheduling a free demo and learning more today!

Final Thoughts

Without landlord insurance cover, you are exposed to financial loss on several fronts. Even if your mortgage agreement doesn't require you to have it, it is seriously worth considering if you want to protect your investment property.

As well as having robust coverage, you need a comprehensive property management tool to keep your business running smoothly.

DoorLoop has the answers and is already helping landlords nationwide run streamlined, efficient, and successful property rental enterprises.

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!