Landlord vs Homeowners Insurance: Which Do You Need for Your Rental Property?
Homeowners insurance and landlord insurance both offer necessary protections for property owners, including property and liability coverages that protect you and your property from several common hazards.
If you’re planning to rent out your property, you’ll likely need to purchase landlord insurance to ensure you are fully protected against the unique risks that come with being a landlord. But if you only rent out your home occasionally, homeowners’ insurance may offer adequate coverage.
To help you decide which type of insurance you need for your rental property, here’s everything you need to know about landlord insurance vs. homeowners’ insurance.
What is Homeowners Insurance?
Homeowners insurance offers several basic coverages, including dwelling and other structures coverage, that help protect your home and its structures from common perils, like fires, storms, vandalism, and theft.
Standard home insurance policies also include liability coverage that may help pay for legal expenses if you are held liable for property damage or injury that another person experiences while on your property.
What is Landlord Insurance?
Landlord insurance offers many of the same coverages for your retinal property as homeowners’ insurance does for your primary residence. It covers the building itself and structures like a garage or shed from damages caused by covered perils, which include hazards like fire, wind, hail, and lightning.
If you plan on renting out your property to tenants, you’ll likely need to purchase landlord insurance to cover the property as homeowners’ insurance often does not cover damages to properties being used as rentals.
Landlord Insurance vs. Renters Insurance
If you own a rental property, it’s also important to encourage your tenants to purchase renters’ insurance to cover their personal belongings as landlord insurance does not cover your tenants’ property.
Many landlords choose to make renters insurance a condition of their lease agreements to ensure their tenants have the necessary coverage to protect themselves and their personal property from damages.
Landlord Insurance vs. Homeowners Insurance: Key Differences
Landlord and homeowners’ insurance offer many of the same coverages with the primary difference being what types of properties they cover.
Here’s a closer look at the key differences between landlord insurance vs homeowners’ insurance to help you decide which you need for your rental property.
Difference in coverages
Landlord insurance and homeowners’ insurance differ when it comes to the extent of personal property and liability coverage they offer.
Homeowners insurance policies usually offer coverage for your personal property or the contents of your home. This includes your furniture, technology, clothing, etc. If your personal property is damaged by a covered peril, your insurance policy may help you pay to replace these items.
Landlord insurance, on the other hand, does not cover your tenants’ personal belongings. Instead, it typically only covers items that are used to service and maintain the rental property. For example, if you store tools on the rental property for general maintenance purposes, landlord insurance may help replace them if they are damaged or stolen.
The liability coverage found in a landlord insurance policy only applies to the rental property. Meaning, it may help you cover legal expenses if you are found liable after a tenant is hurt on the rental property. Homeowners insurance offers liability coverage for you and covered individuals that live in your home.
Landlord insurance also offers unique coverages for rental property owners, including:
- Late rent or non-payments
- Loss of earnings
- Property damage caused by the tenant
These coverages help landlords avoid financial damages due to tenant behavior.
What Type of Insurance Do You Need for Your Rental Property?
In general, if you plan on renting your property out on an ongoing basis, you will need to purchase landlord insurance to ensure the property is covered against potential damages.
Homeowners insurance does not typically cover damages that occur while you are renting out a property. Moreover, if the property is not your primary residence, you will most likely not be able to purchase homeowners’ insurance for the property in the first place.
Consider the rental agreement length
While landlord insurance is generally necessary for rental properties, homeowners’ insurance may provide coverage if you are only renting out your property for a special occasion.
For example, if you are renting out your property for a few days for a local event, your home insurance policy may cover damages caused by certain hazards, like fires or break-ins. Homeowners should check with their insurance provider before temporarily renting out their property to ensure their coverage would still apply.
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Homeowners insurance and landlord insurance both offer essential coverages for property owners, but the type of policy you need depends on how you plan to use your rental property. If you don’t live in the property and are planning to rent it out on an ongoing basis, you will need landlord insurance to cover the home against damages.
At KSA Insurance, we work with homeowners and landlords in South Carolina and across the southeastern United States to help them find personalized homeowners and landlord insurance policies that protect themselves and their properties from a wide range of risks.
Contact us today to request a quote and learn more about landlord and homeowners’ insurance.