Landlord Insurance in Charlotte: What You Should Know

If you own a rental property in Charlotte, you’ve likely poured time, money, and energy into making it a valuable investment. That’s why protecting it matters so much. In Charlotte alone, over 120,000 households are considered cost-burdened, spending more than 30% of their income on housing. Tenants are under pressure, and so are the landlords who rely on their payments.

All it takes is one accident, lawsuit, or bad storm to wipe out months of revenue, making landlord insurance essential. In this article, we’ll explore the different types of Charlotte landlord insurance, how they compare to homeowners insurance, what they usually cost, and the add-ons that can protect you and your business long term. 

What Is Landlord Insurance?

Landlord insurance (also called a dwelling policy) is a specific type of plan that’s meant to cover rental properties. It differs from homeowners insurance because it’s designed to protect people who own rentals, not those who live in them. While you may have a homeowners insurance policy on your own home, or your tenants may buy renters insurance to cover their belongings, landlord insurance in Charlotte is in a completely separate category. The majority of mortgage lenders will require you to have a policy, even if the state or federal government doesn’t require it.

Most policies in Charlotte cover these three areas:

1. Dwelling coverage: Pays to repair rebuild the rental (or parts of it) if it’s damaged by a covered event (like fire, wind, lightning, or hail)

2. Liability coverage: Covers medical bills or legal costs if someone is injured on your property

3. Loss of rental income: Replaces lost income if your tenants have to move out during repairs and aren’t paying rent

Even if you go with a comprehensive Charlotte landlord insurance policy, that doesn’t mean it will protect you no matter what. Common policy exclusions include: 

• Tenant belongings
• Earthquakes
• Pest infestations
• Wear and tear from age
• Damage from neglect
• Mold removal
• Costs associated with eviction
• Intentional damage

Not every situation is automatically covered by landlord insurance in Charlotte, so many landlords choose to expand their coverage by adding endorsements. Some of these include: 

• Flood insurance (important for properties near creeks, rivers, or other low-lying areas by bodies of water)

• Equipment breakdown (covers sudden HVAC or electrical system failures, which are crucial during muggy summers and cold spells)

• Crime-related incidents like vandalism or burglary (this can be particularly useful if your unit often sits empty between tenants)

• Law coverage (pays for code compliance upgrades after damage, which can be especially helpful if you own an older, historic home)

• Landlord belonging coverage (this ensures the policy will protect any items you purchased for the unit, including furniture, appliances, or equipment you use to service the property, like a lawnmower)

Many Charlotte landlord insurance policies no longer apply if your property has been vacant for more than 30-90 days. However, you can often purchase a vacancy endorsement, which extends protection for the property in case you have trouble placing tenants. To avoid large out-of-pocket costs, it’s important to carefully choose a plan that suits your property’s type, location, and susceptibility to risks. 

Comparing Landlord Insurance vs. Homeowners Insurance

As a landlord, you need to be able to distinguish between landlord insurance vs. homeowners insurance. It’s a common mistake to assume that your homeowners policy will also cover your rental, but the two are meant for very different situations. While homeowners insurance covers the home you live in, landlord insurance covers any properties you rent out. 

Under a homeowners insurance policy: 

• Your personal belongings will be protected
• You can make damage-related claims for the damage to the home itself
• You’ll have your living expenses paid for if you’re forced out of your home due to damage
• Medical and legal costs will be covered if someone gets injured on your property
• Any accidental damage you cause will be covered

Under a landlord insurance policy: 

• The building’s structure will be repaired if there’s damage from covered events
• Your rental income will be protected if tenants move out after the unit is damaged
• You’ll be protected from having to pay for medical bills or lawsuits in case of injuries on your property
• You can add extra coverage for things like floods, vacancies, landlord-supplied possessions in the unit, and more

Another major difference between landlord insurance vs. homeowners insurance is the cost. Since there are more risks associated with renting out a home, landlord insurance in Charlotte tends to be 15-25% more expensive than a homeowners policy. That extra cost also stems from the fact that landlord insurance policies are often tax deductible. 

If you use the wrong type of policy, it could mean having a claim denied or the insurance company cancelling your plan altogether. The minute you decide to rent out a property, be sure to get a Charlotte landlord insurance plan in place. 

Different Types of Rental Property Coverage

Getting landlord insurance in Charlotte means you’ll need to shop around for the right policy. Each one comes with unique protections, and it’s important to pick one that takes the different aspects of your business and property into account. The three main types of policies are DP1, DP2, and DP3, with the option of adding umbrella insurance and classifying your business as an LLC. 

DP1 Policies: Basic Coverage

A DP1 (Dwelling Fire Form 1) policy is the most affordable option for Charlotte landlord insurance, but it also comes with the most limitations. It only covers specific “named perils,” which means if a loss isn’t explicitly listed in your policy, you’re not covered. These perils usually include fire, wind, internal explosions, and lightning. Events like vandalism, water damage from burst pipes, and theft are often excluded unless you add them on separately. DP1 pays actual cash value (ACV) for claims, which means the amount you get back will cover what the item was worth before the damage, not what it will cost you to replace or repair it. 

This option works best for landlords with low-risk properties or vacant rentals that don’t need much protection. However, because Charlotte can experience strong storms and unexpected freezes, many owners find DP1 policies leave too many gaps in coverage.

DP2 Policies: Mid-Level Coverage

DP2 (Dwelling Property 2 or Broad Form) policies are more pricey than DP1 policies, but they also protect you against more, making them a popular form of Charlotte landlord insurance. These plans cover all the perils listed in DP1 plus additional, commonly encountered risks such as vandalism, falling objects, and damage from snow, ice, or plumbing issues. 

These policies pay the full replacement cost for repairs, meaning you get the funds to replace damaged items with new ones without the company subtracting for depreciation. They also often include loss-of-rent coverage if your tenants are temporarily displaced so repairs can be made. 

DP3 Policies: Special Coverage 

DP3 (Special Form) policies provide the most complete protection and are generally recommended for landlords with high-value properties or rentals in competitive markets. Instead of covering only named perils, DP3 policies work on an “open peril” basis. That means everything is covered unless it’s specifically excluded (such as floods, earthquakes, normal wear and tear, etc.). 

Like DP2 policies, a DP3 plan also pays replacement costs for repairs and rebuilding. It will also provide coverage in the event your tenants have to move out because of damage. Typically, you’ll also get to add on extras like equipment breakdown or landlord belonging coverage. If you own a property in a desirable, high-cost area like South End or Dilworth, a DP3 policy may be the right Charlotte landlord insurance for you. The higher premium can protect your pockets and peace of mind, especially if you rely heavily on the income you receive from your investment. 

Umbrella Insurance

If you go up against a lawsuit or liability claim that exceeds your policy’s maximum payout, you could be responsible for paying the rest out of pocket. Umbrella insurance bridges that gap, giving you an extra layer of protection in case of injuries, hefty legal fees, tenant disputes, and significant property damage. These policies can apply to multiple rentals, not just one address. They tend to be affordable, often costing less per year than what it would cost to increase the liability limits on each policy individually. 

If you have properties with high tenant turnover rates or live in a high-traffic area, you may be at a higher risk of something going wrong. An umbrella insurance policy can help make sure that one bad incident doesn’t tank your entire investment. 

Limited Liability Company (LLC)

A Limited Liability Company (LLC) isn’t a form of Charlotte landlord insurance, but it can still protect you. By putting your rental property in an LLC, you separate your personal finances from your rental business. This means your home, savings, and other personal assets are better protected if there’s a lawsuit or large debt. An LLC can also offer tax advantages and make you look more professional to tenants, lenders, and contractors. 

It works best when paired with landlord insurance because the LLC limits what’s at risk, and the insurance covers repairs, legal costs, and settlements. Together, they can greatly reduce your personal financial risk.

Landlord Insurance Costs in Charlotte

Preparing yourself for what landlord insurance costs in Charlotte can help you budget for your rental property. While premiums in Charlotte can vary widely, most landlords find that the added cost is worth the protection it provides against unpredictable damage and liability claims. Landlord insurance in Charlotte typically costs around $909 annually. This is on the lower end when compared to the rates in other states. That said, the price you pay will also be influenced by factors such as: 

• Location: About 10% of properties in Charlotte are at risk of flooding. If your property is near Little Sugar Creek or McAlpine Creek, you may see higher premiums. Rentals in high-crime zones may also cost more to insure. 

• Policy type: If you choose a DP3 policy, be prepared to pay more than someone who chooses a DP1 policy. 

• Add-ons: Flood insurance, vandalism coverage, equipment breakdown protection, and vacancy endorsements all add to your premium. 

• Claims history: A property with frequent claims in the past can trigger higher rates or limited coverage options.

• Property condition and features: Updated electrical, plumbing, and roofing can earn you discounts. Older homes, especially in historic neighborhoods, may cost more to insure unless you’ve renovated them extensively. Likewise, if your property has a pool or other amenities that could put tenants at risk, expect to pay more. 

Landlord insurance costs in Charlotte may catch you off guard at first, but there’s a reason these policies are so important to have. Choosing a custom policy that doesn’t break the bank but offers enough protection for your property can help your business stay profitable and your investment safe. Instead of 

How to File a Landlord Insurance Claim in Charlotte

When your rental property gets damaged, the way you handle your claim can determine how quickly you get reimbursed. Below are the most important steps to take:

1. Document the damage: Take quality, timestamped photos and videos from multiple angles, inside and out.

2. Limit further loss: Board up broken windows, turn off water lines, or cover roof damage to prevent additional problems.

3. Notify your insurance provider right away: Many policies have strict timelines for reporting incidents, so be sure to reach out to your insurance company right away. 

4. Submit documentation: Include repair quotes, receipts for emergency fixes, and any written communication between you and your tenants. 

5. Prepare for an inspection: The adjuster will need access to the property to verify the legitimacy of the claim.

6. Keep a paper trail: Keep copies of every email, letter, or phone call related to the claim. 

In North Carolina, insurance companies usually have just 30 days to acknowledge your claim, and then 30 more to investigate and send you the relevant forms. If they need more time, they must inform you of the delay every 45 days in writing. You’ll receive payment within 10 business days if the claim is approved. If it’s denied, you’ll get a written reason why within 30 days of the completed investigation. You’re allowed to file a complaint with the North Carolina Department of Insurance if there are delays without a valid reason.

Wrapping Up: The Value of Charlotte Landlord Insurance 

Owning a rental can be rewarding, but it also comes with risks. Landlord insurance in Charlotte gives you the backup plan you need, covering legal costs, repairs, and lost rent so that one bad incident doesn’t derail your success. 

Whether you feel most comfortable with a DP1 plan and umbrella insurance or a DP3 plan alone, what matters is being prepared and knowledgeable. From the differences between landlord insurance vs. homeowners insurance to the benefits of forming an LLC, the more you know, the better. 

If you’re passionate about your investment but short on time, consider bringing an experienced property manager like Evernest on board. We handle every task, from tenant disputes to maintenance and everything in between. Contact us today to see how our Charlotte-based team can keep your rental business running strong for years to come.