Landlord Insurance in Detroit: What You Should Know

Detroit’s rental market continues to heat up, driven by demand from college students, more job opportunities, and an influx of young professionals. From historic homes to renovated apartments, landlords have plenty of promising options. Of course, owning property here also means dealing with challenges that come with the territory. Harsh winters dump an average of 45 inches of snow, straining roofs, freezing pipes, and leading to slips on icy stairwells. 95% of the city’s homes were built before 1956, meaning wiring, plumbing, and foundations often need extra attention. Add in the historically high crime rate in some areas, and there are plenty of potential hurdles.

Without the right protection, these events can eat into your rental income. Detroit landlord insurance helps shield your investment from these risks, helping you focus on your portfolio instead of more bills. In the sections ahead, you’ll learn more about landlord insurance vs. homeowners insurance, different policy types, landlord insurance costs, and how to file a claim. With this information in hand, you can safeguard your investment and ensure your tenants have a safe, comfortable place to call home. 

What Is Landlord Insurance?

Landlord insurance is a specialized policy for any property you rent out, whether that’s a single-family home, duplex, or apartment unit. It’s not meant for your personal home. Typical coverages for a standard policy include: 

• Dwelling coverage: Pays for the repairs or rebuilding process for the structure itself after a covered event (fire, hail, wind, lightning, etc.)

• Liability coverage: Pays for medical fees and legal costs if someone get injured on the property and you’re found liable by a court

• Loss of rental income coverage: Reimburses lost income if tenants move out and stop paying rent during repairs for a covered scenario

An important thing to remember when shopping for Detroit landlord insurance is that not every situation is automatically covered. Common exclusions found in these policies include:

• Tenants’ personal belongings 
• Mold removal 
• Eviction costs
• Intentional damage
• Everyday wear and tear
• Damage caused by neglect
• Earthquakes, floods, or other natural disasters
• Pest infestations (rats, bed bugs, termites, etc.)

While these exclusions might seem extensive, many of the gaps can be filled with optional add-ons (called endorsements or riders) that expand your protection. Some of the endorsements you may consider adding to your landlord insurance in Detroit include:

• Ordinance or law coverage: Helps cover the cost of bringing older properties up to current building codes after being damaged. This can be a common need in Indian Village, Woodbridge, and Detroit's other historic districts. 

• Vandalism coverage: Pays for repairs after break-ins, graffiti, or intentional property damage from other crime-related incidents. In neighborhoods like Warrendale, Franklin Park, and Fishkorn, this coverage can be essential.

• Equipment breakdown: Covers failures of major systems like boilers, furnaces, or central air, which are common in older Detroit rentals. 

• Vacancy coverage: Keeps your property insured if it’s empty for more than 30+ days, such as during renovations or while searching for a tenant. Without it, your claims may be denied if the damage occurred during a vacancy. 

• Sewer and drain backup: Protects against damage from backed-up drains or sump pumps, which can be a problem in flood-prone areas like Jefferson Chalmers. 

Customizing your policy with the right combination of endorsements can help ensure that your Detroit landlord insurance addresses the needs of your property and the city’s specific risks.  

Understanding Landlord Insurance vs. Homeowners Insurance 

If you’re new to being a property owner, then you might not realize there’s a difference between landlord insurance vs. homeowners insurance. The two may seem similar, but they cover entirely different situations, so it’s important to know which policy you need and why. 

A homeowners policy is meant for a property you personally occupy. It focuses on protecting your personal belongings, the home itself, and additional living expenses if you have to move out during repairs. 

Detroit landlord insurance, on the other hand, is specifically for properties you rent out to tenants. Since rentals are income-producing and carry more risk (from tenant damage to higher liability exposure), these policies are there to cover the building itself, your liability for injuries, and lost income if the unit becomes unlivable due to a covered event. 

In many cases, you’ll need both plans to adequately protect yourself and your investment. In Detroit, this could mean you live in your personal residence in North Rosedale Park (covered by a homeowners policy) but rent out units to college students in the University District (covered by a landlord policy). 

Another distinction between landlord insurance vs. homeowners insurance is the amount you’ll pay. Since rentals are riskier, landlord insurance costs are often 25% more expensive than a comparable homeowners policy. A plus side is that Detroit landlord insurance can often be written off as a business expense for tax purposes. If you plan to rent here, be sure you’re covered by the correct policy to avoid hefty surprise expenses. 

Different Types of Rental Property Coverage

Most Detroit landlord insurance policies fall into one of three categories: DP1, DP2, or DP3. While there’s no “right” plan, each one offers a different amount of coverage, has a specific payout method, and price point. Your risk tolerance, budget, and property will all determine which you select. 

DP1 Policies

If you’re looking for landlord insurance in Detroit with minimal coverage, you may want to go with a DP1 policy (known as Dwelling Fire Form 1). As a “named peril” policy, only the specific risks listed in the contract are covered, which typically include fire, wind, and lightning. Anything not named is excluded. Claims are paid out at actual cash value (ACV), which factors in depreciation. That means the insurance company will assess the age and wear of whatever was damaged and give you a payout based on that, not what it would cost to rebuild or replace it brand new. DP1 policies are the least expensive, but they leave more gaps in coverage, making it best suited for lower-value rentals or properties you can afford to repair with your own money. 

DP2 Policies

DP2 (Broad Form) landlord insurance in Detroit includes a wider range of named perils. In addition to fire, wind, and lightning, it also often covers events like vandalism, damage from snow or ice, and burst pipes from plumbing issues, among other events. The biggest upgrade from DP1 is that clams are paid at replacement cost, which means you’re reimbursed for the full repair or replacement expense without depreciation. Many landlords prefer DP2 coverage because it’s affordable yet still provides plenty of protection. It can be particularly valuable for properties in neighborhoods prone to weather damage or older buildings that might need more maintenance.

DP3 Policies

A DP3 policy (Special Form) provides the broadest protection. It’s an “open peril” policy, meaning all causes of damage are covered unless specifically excluded. Like DP2, it pays at replacement cost, but it also bundles in protections that are optional under other plans. DP3 tends to be the go-to for high-value or historic properties in neighborhoods like Boston-Edison, Indian Village, or West Village, where restoration work can be intricate and expensive.

Umbrella Insurance

Having landlord insurance in Detroit might make you feel safe, but every policy has a ceiling. One severe accident, costly lawsuit, or high medical claim can push you past that limit, leaving you to cover the rest out of pocket. Umbrella insurance covers that difference, protecting your personal and business assets from being drained. In Detroit, where winter ice, older structures, and multi-unit properties raise the odds of costly claims, that extra protection can be a lifesaver. For around $383 per year, you can add $1 million or more in coverage, preventing a single incident from undoing years of investment.  

Limited Liability Company (LLC)

If you own more than one rental property or just want to keep your personal life separate from your rental business, setting up a Limited Liability Company (LLC) can help. An LLC means your rental is owned by the company, not you personally. So if something happens, like a tenant sues over an injury, they’re going after the business, not your house, savings, or personal belongings. That can be a big relief. Some landlords even put each property in its own LLC so one problem doesn’t affect the others. An LLC won’t replace your Detroit landlord insurance, but using both gives you stronger all-around protection. 

Landlord Insurance Costs in Detroit 

Landlord insurance costs in Michigan can vary, but generally cost around $1,022 a year, or roughly $85 monthly. That number tends to be much higher in Detroit because of the city’s older homes, larger population, and higher likelihood of claims. Insurance companies also look at other factors when setting your rate, including: 

• Neighborhood location: Properties in neighborhoods with a history of frequent claims or more complex building requirements can lead to higher rates. Proximity to water and crime statistics also make a difference. 

• Property condition: Updated plumbing, roofs, wiring, and other renovations can help lower rates. Outdated systems or visible damage will push them up. 

• Policy type: A DP3 policy that has several endorsements will quickly add up in price, compared to a basic DP1 plan. 

• Crime rate: Detroit has a severe crime risk, which can raise insurance costs, especially in areas with higher rates of property damage, theft, or vandalism. 

• Claims history: If you’d made claims in the past, an insurance company may view your property as riskier and raise your premium because of it. 

• Safety features: Security systems, deadbolt locks, smoke detectors, and fire sprinklers can sometimes earn premium discounts. 

• Flood risk: While Detroit’s overall flood risk is considered moderate, certain properties, like those near the Detroit River or Rouge River, face a higher chance of flooding and may need additional coverage. 

Choosing the right coverage level for your property’s location and condition is essential to getting full protection without overspending. 

How to File a Landlord Insurance Claim in Detroit

When something goes wrong at your Detroit rental, how you handle the claim can directly affect both your payout and how quickly repairs happen. Since small repairs can turn into bigger projects, knowing the right process (and keeping things organized) can save you time, stress, and money. Here are the steps to take to file your claim: 

1. Review your policy: Before you call your insurer, review your policy’s declaration page so you know exactly what’s covered, your deductible, and any exclusions. 

2. Record the damage: Take time-stamped photos and videos of everything affected, from obvious damage to smaller issues. 

3. Prevent further loss: Make temporary repairs if necessary, such as boarding up broken windows, placing a tarp on a damaged roof, or shutting off water to prevent pipe bursts. Keep all receipts for materials and labor.

4. Contact your insurer promptly: Many Detroit landlord insurance policies require you to report damage as soon as possible. Delays could hurt your claim.

5. Submit documentation: Provide your insurer with estimates from licensed contractors, inspection reports, or police/fire department records if applicable to the situation.

6. Meet with the adjuster: Walk them through the property, point out any damage that’s hidden, and answer their questions honestly. 

7. Keep records: Keep copies of every email, letter, invoice, and receipt. This paper trail will be your best defense if you need to challenge the settlement or a denial. 

Michigan insurers are required to respond to your claim within 30 days of receiving it. They may request more information or pay your claim at that time. After they receive all the information they need, coverage must generally be affirmed or denied (and paid out) within 60 days. If there’s a delay or issue, you have 1 year from the date of loss to file a lawsuit. 

The Takeaway: The Importance of Landlord Insurance in Detroit 

As a landlord in Detroit, you’re working in a city where no two neighborhoods are the same. From one block to the next, the risks can change dramatically, whether it’s higher crime, older housing in need of constant upkeep, or streets that flood after heavy rain. Every property comes with its own set of challenges, and it’s your job to be ready for them. 

Having the right landlord insurance in Detroit can protect your income and investment, but coverage alone isn’t all it takes to run a rental business. That’s where a property manager like Evernest can help. From handling maintenance to anticipating issues unique to your neighborhood, we ensure every aspect of your investment is covered. Reach out today to free up your time and focus more on growing your portfolio.