Landlord Insurance in Colorado Springs: What You Should Know

According to FEMA’s National Risk Index, Colorado Springs ranks among the highest-risk areas in the state when it comes to natural hazards. The region is exposed to 18 different threats, including hail, wildfire, winter weather, drought, lightning, strong winds, and riverine flooding. While hazards like avalanche and volcanic activity are less likely in the city itself, events such as hailstorms, wildfire smoke, and sudden ice storms happen often enough to make a financial impact on local properties.

For landlords, this means landlord insurance in Colorado Springs should be strong enough to handle multiple types of damage, not just the most obvious risks. In this guide, you’ll learn what Colorado Springs landlord insurance covers, what factors influence your premium, how  landlord insurance vs. homeowners insurance differs, and how to file a claim. By the end, you’ll know how to choose the type of policy that matches the unique risks of having a rental property along the Front Range. 

What Is Landlord Insurance?

Landlord insurance in Colorado Springs is meant to protect a property you rent out to tenants, not one you personally live in. Mortgage lenders often require you to show proof of a policy, even though no state or federal law says you need one. While every policy is different, most come with three major protections:

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

2. Liability coverage: Protects you if someone gets hurt on the property and you’re found responsible, covering medical bills and/or legal fees 

3. Loss of rental income coverage: Replaces the rent you miss out on when tenants have to move out for repairs temporarily 

Policies usually won’t cover tenant belongings, gradual wear and tear, pest infestations, vandalism or burglary, mold, eviction costs, routine maintenance, or damage caused by neglect. Floods and earthquakes aren’t included either, unless you buy a separate policy. While Colorado Springs doesn’t flood often, heavy rain in the foothills can send water rushing through Manitou Springs with little warning, creating dangerous flash floods. 

Local landlords may add extra protection for wildfires, crime-related activity, and natural disasters, along with building code upgrade coverage for older properties and equipment breakdown coverage for aging heating systems. These endorsements can turn a standard plan into a comprehensive policy that holds up through every unpredictable event, effectively protecting the property while creating a safe haven for tenants. 

Landlord Insurance vs. Homeowners Insurance

Understanding the differences between landlord insurance vs. homeowners insurance is a good place to start before shopping for a policy. A homeowners policy is meant for owner-occupied properties, covering your personal belongings, some liability for guests, and help with temporary living expenses if you have to move out for repairs. 

Landlord policies are intended for properties that generate income by collecting rent from tenants. It offers broader liability coverage, includes income protection, and is designed for properties that may see more frequent claims than an owner-occupied home. 

Landlord insurance in Colorado Springs does cost more than a homeowners policy (usually by 25%), but that extra cost is often tax-deductible as a business expense. Since rentals are exposed to more everyday risk, most landlords find that the investment is worth the higher price tag. 

Different Types of Rental Property Coverage

Colorado Springs landlord insurance may be essential, but not all policies are alike. It’s up to you to consider not only the hazards your property will be exposed to, but also how much risk you’re willing to take on. DP1, DP2, and DP3 are the three main types of policies you’ll come across, and each offers a different level of protection and affordability.

DP1 Policies

A DP1 policy (also known as Dwelling Fire Form 1) covers only specific “named perils” such as fire, wind, and hail. That means if something else happens on your property that isn’t listed, it won’t be covered even though you have a policy. DP1 plans pay based on the property’s current value, not what it would cost if you were to replace it brand new. The insurance company looks at how old and worn the damaged part is, then subtracts that from your payout, meaning less funds in your pocket. These policies are the most affordable, but you’ll have more out-of-pocket costs if you ever file a claim. They’re usually reserved for older, low-value rentals or properties you’re willing to self-fund repairs on. 

DP2 Policies

A DP2 policy (Broad Form) adds more covered risks, such as damage from heavy snow or ice, falling tree limbs, water damage from burst pipes, and more. The other big difference is how it pays claims. Instead of subtracting for age and wear, DP2 pays by replacement cost, which is the amount it would take to fix or replace the damage with new materials of a similar kind and quality. Because it offers more protection and pays more generously, DP2 policies are more expensive than DP1, but a solid option for a large number of landlords. 

DP3 Policies

A DP3 (Special Form) policy is the most comprehensive type of Colorado Springs landlord insurance. Instead of listing the problems it’ll cover, it assumes every event is covered unless it’s specifically excluded in the plan. Common exclusions might include earthquake or flood damage, or normal wear and tear. Like DP2, it pays the replacement cost for repairs. These policies cost the most, but they usually give landlords the most peace of mind, especially for historic or luxury homes, or those in high-risk areas. 

Umbrella Insurance

Colorado Springs landlord insurance will keep you covered most of the time, but every now and then, something big will happen and the bill is more than what your main policy will pay. An umbrella policy is extra coverage that kicks in during these situations. 

Let’s say your policy covers you for $500,000 in liability, but you get sued for $1 million after a serious accident at your rental. Without an umbrella policy, you’d be paying the extra $500,000 yourself. With one, the gap is covered, and you’re not draining your savings to make up the difference. Umbrella insurance tends to be affordable, costing just $383 per year for an extra $1-2 million dollars in protection. For most landlords, it’s a small price to pay to prepare for worst-case scenarios. 

Limited Liability Company (LLC)

Another smart move is putting your rental property into a Limited Liability Company (LLC). This doesn’t replace Colorado Springs landlord insurance, but it does create a separation between your rental business and your personal life. 

If someone sues over something that happens at your rental, an LLC means they’re going after your business, not your house, car, or personal bank account. It’s especially worth considering if you own more than one property or if your rental is in a high-traffic area where accidents are more likely.

Landlord Insurance Costs in Colorado Springs

One thing to know about landlord insurance costs in Colorado Springs is that policies usually aren’t cheap. The weather is a big reason why, but other risks also play a role. On average, landlord insurance in Colorado costs $1,608 annually or $134.00 monthly, but that tends to be higher in Colorado Springs, which regularly tops the list for hail claims and sits right next to wildfire-prone areas. 

Your actual rate will be affected by other factors such as:

• The age and condition of the property: Newer homes with updated systems usually cost less to insure than older houses with original wiring, plumbing, or roofs that may be more vulnerable to damage.

• Optional add-ons: Extra protections, like wildfire coverage, hail and wind endorsements, or building code upgrade coverage, can raise your premium but provide better protection.

• Property features: Fire sprinklers, impact-resistant roofing, and security systems can sometimes qualify you for discounts, while features like a pool or trampoline can raise your liability costs.  

• Claims history: If you or the property have had multiple past claims, insurers may view the property as a higher risk and charge more. 

• Policy type: A DP3 policy with comprehensive coverage will cost more than a basic DP1 plan.

• Location risk: Properties in neighborhoods near wooded areas, flood-prone springs, or spots with high crime rates tend to have higher premiums. 

• The property’s value: More valuable homes generally cost more to insure because rebuilding them would be more expensive. However, if the home is newly built with high-quality, modern materials, it may qualify for discounts that help offset some of the higher premium.

The right plan will put your mind at ease while accounting for the unique risks your property faces. 

How to File a Landlord Insurance Claim in Colorado Springs

When something goes wrong with your rental in Colorado Springs, the way you handle the first few days can make a big difference in how fast your claim gets processed. Here’s how to file a claim and keep the process moving in the right direction:

1. Document everything right away: Take clear, time-stamped photos and videos from multiple angles. After a hailstorm, don’t just photograph the roof. Also capture dents in siding, damage to gutters, and even hailstones next to a ruler to show size. After wildfires, note any visible ash, smoke stains, or lingering odor.

2. Prevent more damage: While you’re supposed to wait to do major repairs until your claim has been approved or adjusted, insurers still expect you to take reasonable steps to protect your property from further damage. That could mean cleaning up broken glass from windows after a windstorm, shutting off the water to a burst pipe, or tarping part of the roof until repairs start. 

3. Contact your insurance company fast: After major weather events, adjusters can be swamped with claims. The sooner you call, the sooner you get in line for an inspection. Letting too much time pass before notifying the company could result in a denial. 

4. Submit the required paperwork: This might include contractor repair estimates, a police report for vandalism, a fire department report for smoke damage, or a licensed plumber’s report for freeze issues to help your case. 

5. Meet with the adjuster: Make every effort to meet with the adjuster in person, walking them through every area of the home you believe was affected. Point out less obvious damage that they may miss to ensure every aspect of the claim is covered. 

6. Keep records: Save all emails, calls, or letters related to the claim. If you did minor repairs, keep all receipts for materials you purchased. This can be especially important if you need to appeal a decision or request a re-inspection.

7. Know the timeline: In Colorado, insurers are required to pay, deny, or settle a claim (when all the needed information has been provided) within 30 days if it’s submitted electronically or 45 days if submitted by mail or another method. If the claim is more complex or missing information, they generally have up to 90 days to resolve it.

In Colorado Springs, where claims can be common, you may be competing for contractor availability after a big storm or wildfire. Starting early, being organized, and having a list of people to call on hand can help you get repairs done quickly and your rental income flowing once again. 

Why Landlord Insurance in Colorado Springs Is Non-Negotiable

Owning a rental in Colorado Springs is full of opportunity, but the same mountains and weather that make it beautiful also bring risks. Hail, wildfires, flash floods, and sudden freezes can all hit suddenly. The right Colorado Springs landlord insurance policy is what keeps those surprises from turning into financial setbacks. 

If you’re unsure what your policy actually covers or how to handle a claim when something goes wrong, don’t take chances by guessing. Instead, partner with a local property manager like Evernest. Reach out today and let us keep your investment safe.