Colorado Landlord Insurance


Colorado landlord insurance protects your rental property and thus your income from that property. Without the proper protection on your income property you could lose thousands of dollars from a major catastrophe. In Colorado homeowners know that if you don't like the weather just wait a few minutes and it will change. Believe it or not Colorado is one of the top ten states for catastrophic weather damage according to landlord insurance companies. No it is not on the coast where you would think a major storm would cause damage but storms in CO often bring massive hail, wind and snow to the front range area.

Denver and the surrounding suburbs are often on the national news for crazy snow storms in the winter and sprawling hail storms in the summer. If you own a rental property in Colorado it is necessary that you have landlord insurance.

This type of homeowners insurance will provide coverage for the building and its contents but more importantly it will protect the landlord against possible lawsuits from the tenants. Landlords stand a greater risk of a legal action since they are held responsible for the maintenance of a home where other people live. If someone is injured or their personal property is damaged due to the lack of maintenance it is the landlords issue.

We will explore some key coverage that landlord insurance provides to Colorado investment property owners and give recommendations for coverage limits.

Landlord Liability Insurance in CO

Landlord liability insurance in Colorado is simply the protection an insurance policy will provide in the event a rental unit owner is sued for injuries to the tenant or visitors. Usually this involves a lack of maintenance on the landlord's part which caused the injury to the tenant. For example if the landlord agreed to provide snow removal as part of the rental agreement and the tenant slipped and fell while walking on a snowy unkempt walkway this could be reason for the tenant to sue.

If you plan to rent a home in Colorado be sure to have adequate landlord liability insurance on your policy. It is usually included as part of a package policy but be sure it is at least $500,000 in protection if not $1 million. The cost to increase this coverage is often only $30 to $60 per year on most landlord policies.

Investment Property Insurance Deductible in Colorado

It is common in Colorado for home insurance companies to require a minimum deductible level depending on where you live. This is more often found in hail or wind prone zip codes where insurance companies have to offset the higher cost of claims. Most of the time in these specific zip codes you will find a minimum wind & hail deductible on your policy of $1000. It is also becoming more common to find percentage deductibles in these bad weather areas.

Watch out for policies that have percentage deductibles such as 1% or 2% of the building coverage. This is essentially stating that you will pay 1% of the building coverage amount in the event of a loss. For example if the building coverage is $250,000 your deductible for a roof claim would be $2,500. While this type of deductible can save you hundreds of dollars each year on your insurance policy it may be difficult to pay that when you need to file a claim.

Cost of Landlord Insurance in Colorado

The cost to insure your rental property in CO is dependent upon numerous rating factors that home insurance companies use to determine the proper premium. When you own a condo or townhouse the cost of landlord insurance is very minimal because usually you split that cost with the homeowners association which insurers the exterior of your unit. If you insure a single family home or rental complex then your insurance costs are going to be much higher due to the replacement cost of the building is solely your responsibility.

Here are a few of the most common rating factors that insurance companies use to determine your landlord insurance premium:

  • Credit rating - This is your personal credit rating which is similar to a FICO score but can be based on other specific criteria such as payment history and bankruptcy.
  • Location - The zip code or city that your rental unit is located in has a dramatic effect on your insurance premiums as companies who have big losses in those areas will increase rates to get profitable.
  • Building type - This can be numerous things including condo, single family, and townhouse including the materials used to construct the property.
  • Claim history - If you have one or more claims in the past 3 years as a homeowner most insurance companies will surcharge your premium. Some companies may not even accept your business if you have more than two.
  • Discounts - If you have more business with an insurance carrier they are more likely to offer discounts to keep all of your business with them.

How to Find The Cheapest Landlord Insurance in CO

Each insurance company is different in the way they determine your rate and how much the average policy will cost but here are ways to ensure the lowest cost premium based on the factors above.

  • Good Credit - The better your credit the lower the cost of your insurance. Many states are now allowing credit as a rating criteria so get used to it being used. Try to keep your past payment history spotless and a FICO score above 720 is considered excellent.
  • Improve the Location - There is not much you can do about the location once you have purchased the rental property but be sure to keep the home well-kept and surrounding trees cut back to minimize potential hazards. The better your property appears the lower the cost to insure it will be.
  • Building type - Condo and townhouse owners will likely have a home owners association which will cover the exterior of the home so you are only responsible for the interior. This can save you hundreds of dollars each year. If the unit includes custom building and expensive materials expect to pay more because the cost to replace those items is greater.
  • No Claim history - Try not to make a claim if it is a small value of $2000 or less. Most companies look at multiple claims as a sign that you are prone to making claims in the future. If you are deciding whether to make a claim or not contact your insurance agent and ask them personally. Don't call the claim department and ask them because they are likely to document the call and file it for future use.
  • More Discounts - Ask about multiple policy discounts and the combination of auto and home insurance. Sometimes combining your personal auto insurance with this policy can save you 20-30% off each policy.

Colorado's 5 largest cities by population

City - Population

Denver 600,158

Colorado Springs 416,427

Aurora 325,078

Fort Collins 143,986

Lakewood 142,980

*Data from 2010 Census Population by the Department of Economic and Community Development.

Common Landlord Insurance Claims in CO (Colorado)

(Most claims cost over $3,500 to repair wind damage)

(Most claims cost over $5,500 to repair damages from water)

(Most claims cost over $4,800 to repair damage from hail)

Physical Damage
(Most claims cost over $3,500 to repair physical damages to property)

Loss of Rental Income
(Most claims cost over $2,000 to recoup lost rental income)

NOTICE: The amounts listed above are for illustrative purposes only and should not be used to decide what coverage limits you need for your landlord policy. Speak with your insurance agent to determine the proper coverage limits.

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