Insurance is the kind of thing you don’t want to use but are always happy to have it when needed. Homeowners insurance is standard if you own property, but landlords don’t often think about whether or not their rental property is covered, and Illinois landlord insurance can help.
Landlord insurance was specifically created to protect landlords from rental catastrophes. In this guide, we’ll review the kinds of landlord insurance Illinois landlords can choose from and how much it can safeguard your investments.
Key Takeaways
- Landlord insurance isn’t required in Illinois, but it provides peace of mind and coverage for various human and environmental perils, including missed rent payments and personal liability coverage.
- Illinois is known for extreme weather; its unique urban landscapes can threaten property, making landlord insurance crucial whether you live nearby or thousands of miles away.
- TurboTenant has partnered with a world-class landlord insurance provider, Steadily, to provide excellent coverage at affordable rates.
Illinois Landlord Insurance: Why It’s Essential
There are a number of reasons why a landlord might need insurance, and Illinois landlords are no different. Landlord insurance can enable landlords to recover damages from various risk factors — environmental or human — depending on the coverage they opt for.
First, Illinois is known for extreme weather throughout the year, including tornados, heavy snow, and flooding near lakes and rivers. Second, Chicago is one of the country’s biggest and most volatile urban centers. Vandalism and theft are real challenges for some landlords in the Land of Lincoln, making landlord insurance a must.
Illinois Renters Insurance: Why It’s Essential
For landlords, it may seem that renters insurance only covers your tenants. However, requiring tenants to carry a renters insurance policy can also help you.
When your tenant has a renters policy, you can reduce your chances of getting sued, rest assured that tenant belongings are covered, and find responsible tenants who understand the value of insurance.
Find out more in our article, “How Landlords Benefit from Renters Insurance.”
Types of Landlord Insurance Coverage
When it comes to the types of landlord insurance, Illinois landlords have a variety of coverages to choose from depending on the risks their property faces. Landlord insurance is typically broken down into three tiers, with each tier rising in price but offering higher coverage and payout levels for claims.
Here are the three tiers of Illinois landlord insurance.
DP-1
The lowest tier of landlord insurance typically covers nine named perils, meaning it covers only damage related to these risk factors.
DP-1 insurance pays claims based on “actual cash value” (ACV), which factors depreciation into the claim calculation.
The named perils for DP-1 insurance are:
- Fire and smoke
- Lightning
- Hail
- Windstorms
- Explosions
- Riots
- Volcanic eruptions
- Aircrafts
DP-2
The middle tier includes the named perils from DP-1 but adds nine more to the coverage and pays out according to “replacement cost value” (RCV). This means insurance providers pay the amount needed to repair the damages from one of the 18 perils at the current market cost.
Additionally, DP-2 policies will also include fair rental value coverage, which pays missed rent payments due to an inhabitable unit resulting from one of the covered perils. Ultimately, the insurer will reimburse you for the fair value of the rent according to the local area.
Not all DP-2 policies include missed rent payments, as some insurers count this as add-on coverage. Check your policy documentation to find out where you stand.
The additional perils that DP-2 coverage includes are:
- Cracking, bulging, tearing
- Glass breakage
- Structure collapse
- Snow
- Falling objects (like trees or branches)
- Vehicle damage
- Freezing pipes
- Water damage
- Burglary / Vandalism
DP-3
The highest tier of coverage is DP-3. It’s considered an open peril policy and will cover a wider range of damage types unless the plan specifically excludes them.
Often, this level of coverage will also include personal liability for the landlord, which will protect you if someone is injured on your property and the injured party sues.
Typical exclusions from DP-3 policies include:
- Ordinance or law
- Earth movement
- Water damage
- Power failure
- Neglect
- War
- Nuclear hazard
- Intentional loss
- Government action
- Mold
How to Choose the Right Landlord Insurance in Illinois
Choosing landlord insurance can feel overwhelming, given the many providers in the marketplace, multiple coverage types, and add-ons. So, how do you choose the right one for you?
First, assessing your properties and identifying the most likely and serious perils you’ll face is important. If your property is new and in good repair, you might only need DP-1 coverage since the depreciation won’t be significant, and the risk of major structural damage from a peril might not be as consequential.
On the other hand, older properties could benefit from higher tier coverages since the higher replacement value claim payout would cover the replacement of depreciated assets.
Further, the choice of provider is also worth considering closely. Many landlords like bundling their landlord insurance with their other coverages. This makes it easier to keep track of and could result in cost savings.
However, providers only offering landlord insurance can sometimes deliver specialized plans serviced by highly knowledgeable agents.
Top Landlord Insurance Providers in Illinois
There are a number of providers of landlord insurance Illinois property owners can pick from, but we’ve pulled together a few that might be of interest.
Steadily
Steadily has quickly become a major player in the landlord insurance arena with competitive rates and comprehensive plans.
Pros
- Multiple plan options and quick quotes allow swift comparisons with other providers
- Coverage is available for a wide variety of property types
Cons
- No bundling options are available with other insurance coverages
American Family
American Family Insurance offers a variety of insurance types for easy bundling and has overall positive reviews.
Pros
- Their landlord toolbox has a number of helpful resources for property owners
- They offer other insurance types, so bundling options could be a plus for some
Cons
- Claims can take a long time to process, according to multiple online reviews
USAA is a Fortune 500 company that has been around for over 100 years. It provides insurance to military personnel and their families.
Pros
- Outside of just landlord insurance for long-term rentals, they offer coverage for short-term rentals, as well
- USAA offers a wide variety of coverages and can easily convert homeowners insurance to landlord insurance if circumstances change
Cons
- They only provide services to veterans, military personnel, and their families
Liberty Mutual is a legacy insurance provider with a long nationwide insurance coverage history.
Pros
- The ability to bundle homeowners, auto, landlord insurance, and more for cost savings
- Nationwide access means it’s easy to find an agent to discuss coverage options
Cons
- Their size can make customers feel unimportant as opposed to working with a smaller company
Cost of Landlord Insurance in Illinois
The cost of landlord insurance Illinois property owners can expect ranges quite a bit depending on the property you’re covering, the location of the property, and the coverage type and add-ons you need. Generally, though, landlord insurance averages around $1004 per year in Illinois.
Research each coverage provider carefully as you shop around since not all coverages are the same. Some companies automatically include things like fair rental coverage in the higher tiers, for example, but others require a monthly surcharge for that protection.
How TurboTenant Can Help
TurboTenant is high-quality property management software that has helped thousands of landlords streamline their day-to-day management operations and save time and money.
While TurboTenant doesn’t offer landlord insurance directly, we’ve partnered with Steadily to offer great coverage at affordable rates. Landlords should consider software like TurboTenant to help track documents and repairs, stay up-to-date on every tenant’s lease, and keep all aspects of their property management business in one safe, secure place.
For example, TurboTenant features online rent payments, comprehensive tenant background checks, and full-fledged rental accounting software that scales from one property to countless with just a few clicks.
Sign up for TurboTenant today to take your property management to the next level.
Illinois Landlord Insurance FAQs
Is landlord insurance required in Illinois?
Landlord insurance is not required in Illinois, but it’s a great way to protect your investment if the unexpected happens.
Can you require renters insurance in Illinois?
No law in Illinois requires renters to carry renters insurance; however, landlords can choose to require it from tenants if it’s in the lease agreement.