By the Lapera Insurance Team · Reviewed by Joe Lapera, Licensed Illinois Insurance Agent (IL Lic #100722394)
You just rented out the house you used to live in, or you are pricing a first investment property, and the insurance line on your spreadsheet is a guess. Every website gave you a different Illinois landlord insurance cost, and none said where its number came from. Here is what the named, dated numbers say, why a rental costs more to insure, and which choices move the price without quietly moving the coverage.
Landlord insurance in Illinois usually costs more than a homeowners policy on the same house: the Insurance Information Institute says landlord policies generally cost about 25 percent more than a standard homeowners policy, and Illinois homeowners averaged $1,343 a year in 2022 NAIC data. No regulator publishes an Illinois landlord average. Your cost depends on the form (DP-1 or DP-3), replacement cost, loss-of-rents and liability limits, units, vacancy, the building and the deductible.
Most rental owners we talk to are not hunting for the lowest number. They want to know what a reasonable number looks like, so they can tell whether a quote is fair or whether something important was left out to make it look good. That is the right instinct. On a rental, the policy that costs a few hundred dollars less can be the one that pays depreciated value after a fire and nothing for the months of rent you lose during the rebuild.
How Much Does Landlord Insurance Cost in Illinois?
TL;DR: No regulator publishes an Illinois landlord average, so the best-sourced benchmarks are the Insurance Information Institute's rule that landlord policies cost about 25 percent more than homeowners and the $1,343 average Illinois homeowners premium in 2022 NAIC data.
Here is the honest starting point. The Insurance Information Institute (III) says landlord policies generally cost about 25 percent more than a standard homeowners policy (III, Coverage for renting out your home, accessed September 2026). The National Association of Insurance Commissioners (NAIC) puts the average Illinois homeowners premium at $1,343 a year in 2022, against $1,569 nationally, in the most recent state table the III publishes (NAIC data via III, accessed September 2026).
Together, those figures give you a direction: a rental house will usually cost more to insure than the same house would if you lived in it. They are not a landlord average, so please do not multiply them together. The 25 percent is a national rule of thumb. The $1,343 is an average of owner-occupied HO-3 policies of every size and coverage level in force across Illinois.
The $1,343 is from the NAIC's annual homeowners report, 2022 data, as published by the III: written premium divided by house-years (365 days of coverage on one dwelling) for HO-3 policies on owner-occupied one-to-four family homes, across every limit, deductible and ZIP code in Illinois. It leaves out rental policies entirely. The 25 percent is III consumer guidance, not a filed rate. Rate-comparison websites publish Illinois landlord "averages" that disagree by hundreds of dollars because each prices its own sample property with its own limits, deductibles and ZIP codes. The honest alternative is a quote on your building.
You may also see the NAIC's dwelling fire numbers offered as a landlord benchmark. We checked the source, and it does not work that way. In the NAIC's latest report, published July 2026 with 2023 data, the dwelling fire data is defined as "one family, owner-occupied, non-seasonal buildings" (NAIC homeowners and dwelling fire report, Data for 2023). That is the scope of the report's data, not a limit on the product: the figure reflects owners insuring the home they live in on a dwelling form, and rented dwellings fall outside what it measures. It is also a thin slice: 15,517.7 house-years in Illinois, 0.4 percent of the state's exposures in the report, against 2.1 percent countrywide.
Dwelling forms (DP-1, DP-2 and DP-3) are not only for rentals; owner-occupants use them too, often on an older or hard-to-place house. The NAIC notes that dwelling fire premiums are generally lower than homeowners premiums, "reflecting the more limited coverage offered by dwelling fire policies." So a dwelling fire average describes owner-occupants buying thinner coverage, not a landlord buying a DP-3 with loss of rents and real liability limits. For the owner-occupied side of the comparison, see our breakdown of what Illinois homeowners actually pay.
Lapera Insurance Agency is a Farmers Insurance agency at 530 Barron Blvd in Grayslake, Illinois. Our team has priced and placed Illinois rental property coverage since 1993, with over 40 years of combined experience, from a single converted house to two-to-four unit buildings. We price the coverage the building actually needs first, then look for savings that do not come out of the claim check. Every guide on this site is reviewed by a licensed Illinois agent before it publishes.
Why Does Landlord Insurance Cost More Than a Homeowners Policy?
TL;DR: A rental carries exposures an owner-occupied home does not, including vacancy between tenants, turnover, a broader liability exposure and loss-of-rents coverage, and some of the extra premium buys coverage you genuinely want.
The higher price is not a landlord tax. Underwriters price what they expect to pay, and a tenant-occupied building behaves differently from a house where the owner sleeps every night.
Vacancy between tenants
An empty unit is when leaks go unnoticed and vandalism risk peaks. Carriers price that, and restrict some coverage once vacancy runs long.
Turnover
Every move-out brings wear, and every move-in brings a household the carrier never underwrote.
Nobody on site
An owner notices a dripping supply line on day one. A tenant may not report it until the subfloor is soaked.
Owner liability
Landlord liability responds if "a tenant or one of their guests gets hurt on the property" (III), on stairs and porches you do not use yourself.
Loss of rents
Most landlord policies cover lost rental income while the property is repaired after a covered loss (III). Premium well spent.
More households
A two-flat or four-flat puts several families, their guests and their cooking under one roof.
Notice what is not on that list: your tenant's belongings. The III is explicit that a tenant's personal possessions are not covered under your policy, which is why the tenant needs their own renters policy. If you are still deciding whether you need a landlord policy at all, our walkthrough of what a DP-3 landlord policy covers explains why a homeowners policy stops fitting once a tenant moves in.
How Much Does DP-1 vs DP-3 Change the Price of a Rental Policy?
TL;DR: A DP-1 with actual cash value settlement is usually the lowest-priced form because it covers a short list of perils and pays depreciated value, while a DP-3 with replacement cost costs more and pays far more after a loss.
The policy form is the biggest coverage decision on a rental, and it is often where a low quote gets its low price.
| Form | What it covers | Usual settlement | Price | Our view |
|---|---|---|---|---|
| DP-1 (basic) | A short list of named perils, such as fire and lightning | Actual cash value, after depreciation | Usually the lowest | Rarely right for a mortgaged rental |
| DP-2 (broad) | A longer list of named perils, still a list | Often replacement cost on the dwelling | In between | Case by case |
| DP-3 (special) | Open perils on the dwelling: covered unless excluded | Replacement cost available | Usually the highest | Our default for Illinois rentals |
The settlement basis matters as much as the form. The Illinois Department of Insurance explains that replacement cost is what it would take to rebuild without deducting for depreciation, while actual cash value subtracts depreciation (IDOI homeowner and renter shopping tips, accessed September 2026). On an older building, that gap can be tens of thousands of dollars on one fire. The Department also recommends insuring for at least 80 percent of replacement value, measured against rebuild cost, not sale price; see how to size dwelling coverage to rebuild cost.
It is the lowest-priced way to satisfy the word "insured" on a lender's checklist, and the form most likely to leave you short when the building burns. It pays depreciated value on a short list of perils, and unless you add it, it may carry no loss-of-rents coverage. The mortgage balance does not depreciate, and the payment keeps coming due while the unit sits empty. Read your mortgage's insurance requirements before you choose.
What Else Moves the Price of an Illinois Landlord Policy?
TL;DR: Units, the loss-of-rents and liability limits you choose, the building's age and systems, its location, the deductible, your insurance score and optional water coverage all move the premium, and most of them are also coverage decisions.
- Units: one to four versus five or more. The Illinois Department of Insurance's dwelling fire filing checklist defines that category as residential property "up to and including a 4 family dwelling" (IDOI checklist, revised August 2025). Single-family rentals through four-flats can sit on personal dwelling forms; at five units most carriers move to a commercial apartment program at different pricing. See our guide to insuring Chicago two-flats through four-flats.
- Loss-of-rents limit. Usually a number of months or a percentage of the dwelling limit. More months cost more; size it to a realistic rebuild, not the best case.
- Liability limit. Raising it usually costs far less than the protection it adds. We rarely recommend the default.
- Building age and systems. Roof age, electrical service, plumbing and heating affect both rating and eligibility. Wind and hail exposure is part of how Illinois property is priced, which is one reason roof age weighs so heavily. Carriers only know about updates you report.
- Location. Fire protection class, local claim history and nearby water. In the 34 Illinois counties designated for significant mine subsidence exposure, policies include mine subsidence coverage at a separately stated premium unless waived in writing (IDOI checklist).
- Deductible. A lower deductible means a higher premium (IDOI). Pick one the property's reserve could pay tomorrow.
- Insurance score. Illinois permits credit information in personal insurance rating (215 ILCS 157). Insurers must disclose that it may be used and, with limited exceptions, must re-rate on a current credit report or insurance score if you ask (IDOI checklist).
- Water backup and flood. Sewer and sump backup is typically excluded unless endorsed; see sewer backup and sump pump coverage. Flood is a separate policy, with a 30-day NFIP waiting period in most cases (FEMA FloodSmart); see what flood insurance costs in Illinois.
How Do Vacancy and Short-Term Rentals Affect Landlord Insurance Cost?
TL;DR: Long vacancy narrows what the policy pays, and short-term rental use can fall outside a standard landlord form entirely, so both need to be disclosed and may change the price or the policy itself.
Illinois sets a floor for fire losses on an empty building: the Department's checklist, reflecting the Standard Fire Policy under 215 ILCS 5/397, says fire damage to a vacant or unoccupied building must be covered until it has been vacant or unoccupied for 60 consecutive days (IDOI checklist). Beyond fire, most dwelling policies restrict vandalism and some water losses after a stated vacancy period. A short turnover is priced in; a months-long rehab or estate vacancy is not. Tell us before it stretches, because a vacancy endorsement costs something and an uncovered vandalism loss costs far more.
Short-term rental use is the other big one. The NAIC warns that "most homeowners or dwelling insurance policies are not designed to cover accidents arising from short-term rentals," that frequent listing can be treated as a business, and that paying guests may be excluded from liability protection (NAIC consumer insight, March 2020). Talk to your insurer before listing, and do not assume the platform's coverage replaces your own.
The most expensive landlord policy is one written for a use you are not actually making of the building. Long vacancy, gut rehab or a short-term listing: tell us first. The premium may change. The claim check will still show up.
Should an Illinois Landlord Add an Umbrella Policy?
TL;DR: For most rental owners yes, because one personal umbrella can add liability above your landlord, home and auto policies at once, and it is often a lower-cost way to add a large limit than raising each policy.
A tenant's guest falls on an icy back stair. A delivery driver goes through a rotted porch board. Claims like these can run past a landlord policy's liability limit, and the difference comes out of your savings or other properties.
A personal umbrella pays after your underlying limits are exhausted, and one policy can sit above the rental, your home and your cars. Two cost details matter: umbrella carriers require minimum underlying limits, so your landlord liability may need to rise a little, and each rental must be scheduled on the umbrella. Our explainer on how a personal umbrella stacks on your other policies covers the structure, and what umbrella insurance costs in Illinois covers the price.
Does Requiring Renters Insurance Lower Your Landlord Insurance Cost?
TL;DR: Not directly, since your premium is priced on your building, but a tenant's renters policy covers their belongings and liability, which keeps many disputes and small claims off your policy and costs the tenant relatively little.
The III notes that many landlords require a tenant to buy renters insurance before signing a lease (III), and we recommend it on every lease. It is not a big ask: NAIC's 2022 data puts the average Illinois renters (HO-4) premium at $151 a year, against $171 nationally (NAIC data via III). Send prospective tenants our look at how much renters insurance costs in Illinois.
- Name a minimum liability limit in the lease, commonly $100,000 or $300,000.
- Ask to be listed as an interested party, so you hear if the policy cancels.
- Collect the declarations page at signing and at each renewal.
- Do not expect a discount on your own policy for it. The value is in claims that never land on your policy.
What Changed for Illinois Landlord Insurance Costs in 2026?
TL;DR: In its July 2026 report, the Illinois Department of Insurance said Illinois homeowners written premium rose 9.6 percent in 2025, ahead of the 8.5 percent national increase, a useful signal for rental dwellings priced on the same buildings and perils.
There is no state report on landlord premiums, so the best current signal is the homeowners line, which prices similar buildings against the same weather and rebuild costs. In its 2026 Cost Containment Annual Report (July 1, 2026), the Illinois Department of Insurance reported a 9.6 percent increase in homeowners written premium during 2025, against 8.5 percent countrywide. The Illinois homeowners loss ratio fell from 77.8 percent in 2024 to 61.4 percent in 2025. One better year is welcome, but carriers price on several years of losses, so we would not read it as a promise of lower renewals.
Two more things worth knowing. The NAIC's July 2026 report, with 2023 data, still has no landlord category. And if a carrier non-renews a dwelling policy, Illinois requires at least 30 days' notice with a specific explanation of the reason, and once a policy has been in force more than five years, 60 days' notice unless the policy was obtained by misrepresentation or the risk has measurably increased (215 ILCS 5/143.17, per the IDOI checklist); our guide to what to do after an Illinois non-renewal covers the next steps.
How Can You Lower Landlord Insurance Cost Without Underinsuring?
TL;DR: Raise the deductible to a level your reserves can cover, bundle the rental with your own home and auto, document every system update and ask for a re-rate, but keep replacement cost, loss of rents and real liability limits.
- Tune the deductible to the reserve you actually keep (IDOI).
- Bundle with your home and auto. The Illinois Department of Insurance notes some insurers discount bundled coverage. We place landlord coverage with Farmers and the Farmers family of carriers, plus additional markets; see whether bundling makes sense for your household.
- Document updates and ask for a re-rate: roof, panel, supply lines, furnace. Send the years and receipts.
- Keep it leased and maintained: short vacancies, working smoke detectors, sound stairs and handrails.
- What we will not do: switch you to actual cash value, drop loss of rents, cut liability to the minimum or remove water backup on a building with a basement to hit a number.
An Illinois owner with a mortgage compares two quotes on a 1960s single-family rental that leases for $1,800 a month. Quote A is a DP-1 at actual cash value with no loss-of-rents coverage selected, and it is several hundred dollars a year lower. Quote B is a DP-3 at replacement cost with 12 months of fair rental value. A tenant's kitchen fire causes $90,000 of damage and the house is uninhabitable for five months. Illustrative outcome: under Quote A, depreciation cuts the payment to roughly $60,000 and the $9,000 of lost rent is not covered, so the owner absorbs about $39,000 plus the deductible while still paying the mortgage. Under Quote B, the repair is paid at replacement cost less the deductible and the five months of rent are covered. These figures are illustrative, not a quote, a premium or a coverage determination; actual results depend on the policy language and the facts of the loss.
Farmers, for example, lists loss of rents, landlord liability and personal injury coverage for claims such as wrongful eviction among its landlord options, with availability varying by state (Farmers landlord insurance). We build the quote around those pieces, then work on the price.
Want a real number on your building instead of an average? Start on our Illinois landlord insurance page or request a landlord quote, and our Grayslake team will price a DP-3 with the loss-of-rents and liability limits your property needs.
The Bottom Line
There is no official Illinois landlord insurance average, and anyone who gives you one without a source is guessing. The named sources agree on the direction: the Insurance Information Institute puts landlord policies at about 25 percent more than a standard homeowners policy, Illinois homeowners averaged $1,343 in 2022 NAIC data, and the Illinois Department of Insurance reported homeowners premium up 9.6 percent in 2025. The extra cost buys real things: coverage for a building you do not live in, liability for people you do not control, and the rent you lose during repairs.
Get the coverage right first, then work the levers that do not cost you at claim time: the deductible, bundling, documented updates and your insurance score. Send us the address, the monthly rent and your current declarations page, or call (847) 223-4747, and we will show you what a properly built landlord policy costs on your building.
Related Questions
Is landlord insurance more expensive than homeowners insurance in Illinois?
Usually, yes. The Insurance Information Institute says landlord policies generally cost about 25 percent more than a standard homeowners policy. The drivers are vacancy, turnover, a broader liability exposure as the owner, and loss-of-rents coverage that replaces rental income while the property is repaired after a covered loss.
Is there an official average cost of landlord insurance in Illinois?
No. Neither the Illinois Department of Insurance nor the NAIC publishes an Illinois landlord average, and the dwelling fire figures in the NAIC's report are limited by the report's scope to one-family, owner-occupied buildings, so they do not measure rentals. Comparison websites disagree because each prices its own sample property with its own limits, deductibles and ZIP codes. A quote on your building is the only reliable number.
Is a DP-1 policy enough for a rental property with a mortgage?
Rarely. A DP-1 covers a short list of named perils, usually pays actual cash value after depreciation, and may carry no loss-of-rents coverage unless you add it, while the mortgage balance does not depreciate. For most Illinois rentals with a loan, a DP-3 with replacement cost and fair rental value is the safer choice.
Does a short-term rental cost more to insure than a long-term rental in Illinois?
Often, and it may need a different policy. The NAIC warns that most homeowners or dwelling policies are not designed to cover accidents arising from short-term rentals, and frequent listing can be treated as a business. Tell your insurer before the first guest and ask about an endorsement or a policy built for short-term use.
When does an Illinois rental need a commercial policy instead of a landlord policy?
Usually at five or more units. The Illinois Department of Insurance's dwelling fire filing checklist defines that category as residential property up to and including a four-family dwelling. Single-family rentals through four-flats can typically be written on personal dwelling forms, while five-plus unit buildings generally move to a commercial apartment program.
Can a higher deductible lower landlord insurance premiums in Illinois?
Yes. The Illinois Department of Insurance explains that a policy with a lower deductible costs more, so raising it lowers the premium without narrowing what is covered. Choose a deductible the property's reserve could pay tomorrow, because after a loss you may also be absorbing a vacancy while the claim is handled.
Last reviewed September 2026 by Joe Lapera, Licensed Illinois Insurance Agent (IL Lic #100722394). Figures verified against the sources linked above on that date.