Your Guide to Multi-Family Homeowners Insurance

WRITTEN BY: Mark Romero

UPDATED: MAY 08, 2023 | 3 MIN READ

Many people choose to get multi-family homes as an investment properties for passive income. Real estate investing is a great income source that lasts a long time bringing in a constant cash flow. Multi-Family Homeowners Insurance can be obtained to protect your investment home and your tenants.

Because these homes have multiple units in one, specific challenges come up. You want to ensure that you have home insurance coverage. In addition, you should educate your tenant on what your insurance covers and what policies they might want to have on their own. Before purchasing a multi-family home, here’s everything you need to know.

Types of multi-family homes

What Counts As A Multi-Family Dwelling?

A multi-family dwelling is different from a single-family property. It’s any building capable of housing more than one occupant in its unit. Each living unit would have its kitchen, bathroom, and living spaces, with walls dividing the units to keep them private and separate. The owner of multi-family home life in one of the units rents out the rest or rents them all out and lives elsewhere.

Some examples of a multi-family dwelling are:

  • a house with separate upstairs and downstairs flats
  • a duplex with two units side by side
  • a four-plex, meaning a home with four independent apartments.

Multi-family real estate applies to homes, condos, triplex, townhouses, and standard apartment complexes; this guide applies to stand-alone houses with multiple interior units.

Contact a real estate agent if you’re interested in finding a property to use as an investment property. You should also research how much you need for a down payment and check the current interest rates attached to your mortgage payments.

Owner-Occupied Multi-Family Homeowners Insurance

Lenders and real estate investors usually want owners to have home insurance on their properties. When shopping for multi-family dwelling insurance, the first question is if the home is owner-occupied.

Does the owner live in one of the units of the property?

If yes, you can purchase standard homeowners insurance to cover the cost of repairing damages to the structure and its surrounding exterior features.

Note that standard homeowners insurance covers the exterior and framework of an entire structure, so renting out a unit in the house shouldn’t affect that policy.

For example, suppose the home suffers roof damage during a storm. In that case, your homeowners insurance should cover repairs even if that damage is located over the rented unit.

Non-Owner Occupied Multi-Family Homeowners Insurance

If the homebuyer doesn’t live in the multi-family properties, you would typically need a Dwelling and Fire policy (DP) to protect your multi-family investment.

A DP policy covers the structure itself in a fire or another disaster. It’s meant for multi-family dwellings used solely for renting, not for your occupancy.

To ensure you opt for the best DP policy for your unit, here is everything you need to know about this coverage:

Covering lost rent from tenants

A DP policy also provides coverage for “loss of use,” or the home’s fair rental value, reimbursing you for lost rent while the house is being repaired. If you rely on the rental income from your multi-family dwelling, ask about this coverage, and ensure it’s adequate for your needs.

Re-homing your tenants

Loss of use coverage also includes a small amount to help tenants relocate during repairs. This is an excellent coverage option to consider if you want to ensure your tenants decide to return to your property after it’s repaired. They may appreciate every courtesy you extend to them during that time.

Covering additional structures

It’s vital to note whether outside structures and features need additional coverage. These structures and elements might include a garage, a swing set for the children, or a wood deck. Ensure you have proper coverage for these items and the house itself.

Liability insurance

Liability insurance reimburses the cost of medical bills for someone injured on your property, as well as property damage for which you’re responsible. For example, if a renter slips on ice outside the property, you might be liable for their medical bills. If a tree falls on their car, you might also be responsible for repairing it.

A property owner must understand that these costs are outside standard homeowners or DP policies for their housing units. Even a minor accident is costly, so ensuring you have adequate liability insurance for your multi-family dwelling is good.

Personal property insurance

Homeowners or DP insurance policies don’t protect personal belongings inside a unit, including kitchen appliances, ceiling fans, light fixtures, clothing, or electronics.

Suppose you don’t live in the house and don’t provide furniture for tenants, instead using the property for cash flow. In that case, you may not need personal property insurance. However, it’s good to consider some coverage for appliances and other such costly items.

Also, you might help your tenants understand that their belongings aren’t covered under your property insurance and suggest they carry a renters insurance policy.

You won’t run into misunderstandings about your financial responsibility if your furniture, clothes, and so on are damaged in a fire, flood, or another disaster.

What Impacts Your Multi-Family Homeowners Insurance Costs

If you’re a property owner, no doubt you want to do everything possible to lower your insurance costs. Note some details that often affect insurance premiums so you’re able to make adjustments:

Old wiring

Old wiring is more likely to become bare and frayed, putting your building at risk for an electrical fire. Updating the home’s wiring might reduce your fire insurance costs and provide you with lower home insurance costs.


A firewall between units using common walls helps to contain a fire that starts in one location, reducing fire damage to the house overall. Note the construction of the wall or walls between units. Consider upgrading to a firewall for the safety of your tenants. This can lower your insurance costs in your rental units.


Owner-occupied multi-family dwellings are often maintained more readily than owners who live offsite. Consider moving into one of the home’s units to lower your insurance costs and keep your property in the best possible condition overall.

Smoke and CO detectors

Most areas require smoke alarms in homes and rental properties, even apartment buildings. Still, you might lower your insurance costs by adding more smoke detectors and installing carbon monoxide detectors. Also, ask your insurance agent if providing tenants with fire extinguishers reduces your insurance costs.

Exterior maintenance

Ask your insurance agent if you can lower your liability policy costs by hiring an outside company to remove snow and ice or otherwise maintain the property’s grounds. A property management company might be more skilled at keeping a property safe for tenants, and reducing your insurance costs offsets the fees.


What’s the difference between houses and multi-family housing?

Single-family housing is a freestanding structure with no shared walls with another residence. At the same time, multi-family homes contain separate residential units within a single structure. Multi-family homes are in the form of apartment buildings, townhouses, triplex, and so on.

What is an example of a multi-family home?

Examples of multi-family homes are a townhome, multi-family units, apartment buildings, apartment complexes, condominiums, triplexes, and fourplexes.

What is the difference between an apartment and a multi-family?

An apartment building refers to a suite of rooms, forming one residence within a building that contains many similarly structured units. A multi-family building is a rental apartment building where the entire building is under the same ownership.

What are the three key attributes of a multi-family residential property?

A multi-family residential property has three key attributes: quality of buildings, location, and a positive cash flow. The reals estate term for a multi-family residential property is multi-unit.

What are the three most common types of multi-family housing?

Multi-family housing types include triplexes, duplexes, fourplexes, and bungalow courts.

What is the most common form of housing?

A single-family home is a detached building built on a lot. They’re the most common type of home, and roughly 70% of Americans live in one.

What are the different types of multi-family structures?

Multi-family housing has many different structures, including bungalow courts, townhouses, garden apartments, duplexes, triplexes, fourplexes, high-rise apartments, condominiums, multistory, and apartment buildings.

How to Get Multifamily Homeowners Insurance

Insuring a multi-family dwelling is tricky, but it’s possible to put it together. Ensuring you have the right coverage in case something happens is essential. We hope this article has helped you understand your options and what’s covered under each type of policy. If you’re ready to get quotes for your property, it’s as simple as comparing rates as amounts vary by company. Fill out our online request form to find the best multi-family homeowners insurance.