Does building insurance cover a new roof on a rental property?
Short answer. A landlord's building policy, usually called a dwelling fire policy, pays for a new roof only when a covered peril such as wind or hail damaged it beyond repair, the same basic rule as a homeowners policy. Basic DP-1 forms cover fewer perils and often settle at actual cash value, while DP-3 forms work much like a homeowners policy, so the form matters.
Which form do you have?
- DP-1, basic. Named perils, starting with fire and lightning, with windstorm and hail often added through extended coverage. Usually actual cash value.
- DP-2, broad. More named perils, sometimes with replacement cost.
- DP-3, special. Open perils on the building, usually replacement cost, with the familiar exclusions for wear, rot and neglect.
Your declarations page names the form. If windstorm and hail are not covered on a basic form, a storm-damaged roof may not be covered at all.
A new roof because of age
Not covered. Replacing a worn-out rental roof is a capital improvement you pay for, generally depreciated for taxes over time. Ask a tax professional.
Interior damage and tenants
The landlord's policy covers the building, including ceilings and walls. Tenants' belongings are covered only by their own renters policy. Lost rent while a unit is unlivable may be covered as fair rental value if your form includes it.
Landlord steps that protect a claim
- Require tenants to report leaks right away, in writing, so the date is clear.
- Have the roof checked after major storms, since tenants rarely look up.
- Keep maintenance records to answer a wear and tear denial.
See ACV vs RCV and does homeowners insurance cover roof replacement.