Error analysis of inertial navigation systems is one of the important tasks in inertial navigation research. Through error analysis, the contribution of each error in the system to the total error can be obtained. This work is particularly important in the rotary modulation inertial navigation system, because it is necessary to evaluate the suppression effect of the rotation strategy on various error sources through error analysis. Firstly, a state space model of the error has been established based on the system error model, and the total navigation error is divided into linear combinations of various error factors through recursion and decomposition. The derived covariance update equation can be used to quickly and accurately obtain the contribution of various errors including initial error and device error to the total system error. Simulation results of strapdown, single-axis and two-axis modulation systems verifies that the error propagation rules calculated by the proposed method are in agreement with the known conclusions. Simulation of different modulation strategies shows that the proposed method is fast and intuitive in evaluating rotation strategies.