Landlord Insurance vs Homeowners Insurance: Key Differences Explained

When it comes to protecting your property, knowing the difference between landlord insurance vs homeowners insurance is key. Whether you plan to rent a property out or live in it yourself, the different types of insurance serve different purposes and coverage. In this blog post, we aim to clarify the differences between these two policy types to help you determine which is right for you.

What Is Homeowners Insurance?

Homeowners insurance is for people who own a home and live in it. Landlord Insurance vs Homeowners Insurance: Key Differences Explained It protects your Home Structure & Your Personal Belongings Homeowners insurance is designed to cover damage in events like:

Landlord Insurance vs Homeowners Insurance: Key Differences Explained

1. Fire
2. Theft or vandalism
3. Storm damage
4. Injuries or accidents that occur on the property

When you take out a mortgage on your home, lenders generally require homeowners insurance. The policy protects the house, the homeowner’s personal belongings inside the house and any legal liabilities if someone is injured on the property.

Homeowners Insurance Key Components:

• Dwelling Coverage: Covers the physical structure of the home.
• Personal Property Coverage: This protects the homeowner’s personal items within the house.
• Liability Coverage: Covers injuries or accidents that happen on the property.

The only other type of coverage that we might want to talk about is: Additional Living Expenses: This helps to pay for living expenses if you are out of the home, if you insured the home and it is somewhat damaged and it is not livable, a lot of people will have to move out of the home temporarily, this is also the coverage that provides that.

What Is Landlord Insurance?/ Landlord Insurance vs Homeowners Insurance

If you are a landlord, you may confront varying risks than a homeowner. Landlord insurance helps to cover the property’s physical structure, income and liability related to tenants or other visitors.

Fundamentals of Landlord Insurance:

• Property Damage Coverage: Insurance for builders that pays for damage to the structure from fire, storms or vandalism.
• Liability Coverage: Safeguards landlords against legal suits related to injuries or accidents that occur on the rental premises.
• Rental Income Loss: This coverage reimburses lost income from tenants if damage renders the rental property unfit for living.
• Tenant-related Damage: Greasy businesses and unruly guests will not be covered by homeowners insurance but some landlord policies will cover this type of damage.

Differences Between Landlord Insurance vs Homeowners Insurance

Now that we know the foundational definitions and components of each type of insurance, let’s take apart the fundamental differences between landlord insurance vs homeowners insurance:

Coverage for Rental Income

Perhaps the biggest difference between the two types of insurance involves protection for rental income. Landlord insurance usually also has coverage for loss of rental income, which means you can get paid for what your tenants would have paid you for the rental, even if your rental property is uninhabitable due to a covered peril.

Homeowner’s insurance does not cover rental income because it is for homeowners who do not rent their home.

• Also known as Landlord Insurance: Protects against lost rent payments if the house becomes uninhabitable.
• Homeowners Insurance: Rental income is not covered.

Landlord Insurance vs Homeowners Insurance: Key Differences Explained

Dwelling Coverage: What is Included in Homeowners Insurance?

Homeowners insurance offers coverage for your personal property, including furniture, clothing, electronics and anything else that you own that you keep in your home. But landlord insurance usually doesn’t cover the tenant’s personal property. Landlord insurance protects the property’s structure and the landlord’s possessions.

If you’re renting out your property, you should encourage your tenants to obtain renters insurance in order to protect their personal possessions.

• Landlord insurance: Does not cover your tenant’s stuff.
• Homeowners insurance: A type of auto insurance that covers personal property inside the home.

Liability Protection

Both kinds of insurance cover liability, but the types of risks they cover are different. Homeowners insurance protects the homeowner from liability for accidents or injuries that take place in the home, whereas landlord insurance provides liability coverage associated with accidents or injuries on the rental property, for instance accidents involving a tenant or a visitor.

For instance, if a renter trips and is injured on your rental property, landlord insurance will cover the legal fees and medical expenses. If someone falls in the home you own and live in, homeowners insurance would cover those costs.

• Landlord insurance: Protects against rental liability for injuries to tenant and visitors.
• Homeowners Insurance: Covers any liability for injuries or accidents that happen in the home.

Coverage for Tenant Damage

Landlord insurance typically protects against tenant-caused damage. Homeowners insurance usually doesn’t offer this, but landlord insurance may offer provisions to protect you from damages tenants may cause, such as deliberate damages or neglect. This may be particularly relevant if your tenant does a lot of damage that goes beyond the security deposit.

Tenants don’t generally pay landlords’ homeowners insurance premiums or have any tenancy coverage, so damage caused by tenants isn’t typically covered under homeowners insurance, which is designed for owner-occupied homes.

• Tenant Property Damage Liability Coverage: Covers damage caused by tenants (with a few exceptions).
• Homeowners Insurance: Serves not cover damage caused by a tenant.

Premium Costs

Landlord insurance premiums are typically more expensive than homeowners insurance premiums. Landlord insurance costs reflect these factors, as landlords face additional risks from damage by tenants and loss of rental income. In contrast, homeowners insurance is usually cheaper because its coverage is more simple and it doesn’t cover rental-related risks.

• Landlord Insurance: This is often pricier because of the extra coverage you need.
• Homeowners Insurance: Is usually cheaper because you’re only covering the house you occupy.

When to Pick Landlord Insurance as opposed to Homeowners Insurance

• Choose Homeowners Insurance if: You occupy the property, and you want coverage for your dwelling, personal property and liability exposure from owning a home.
• GET LANDLORD INSURANCE IF: You rent out property and need the structure, liability risks, tenant-related damage and loss of rental income covered.

Final Thoughts: Which Is Right for You?

Landlord insurance vs homeowners insurance: what you need to know If you have a property that you live in, homeowners insurance will be the coverage necessary for you. But if you rent your property, landlord insurance is a necessary expense to cover tenant-related risks, property damage, and loss of rental income.

First, check your insurance plans and speak with the insurance professional to understand if you’re getting the right insurance as per your situation before taking a read.

Key Takeaways:

• If you own and rent your home, landlord insurance covers things like missing rental income and damage caused by tenants your homeowners insurance won’t.
• Homeowners insurance protects personal property located within the home; landlord insurance does not protect tenants’ personal property.
• Both types of insurance include liability coverage, but that coverage applies to different circumstances.

You can pick the type of insurance necessary for your property by knowing these differences and keeping yourself well-protected.