Landlord Insurance vs. Homeowners Insurance: What’s the Difference?
Insurance is your safety net if you own a home. The net needs to be woven differently if you rent that house to someone else. That’s the core of landlord insurance versus home insurance — the risks change when you’re not the one living there, so the policy should, too. You might wonder whether you need both homeowner's insurance and landlord insurance, but, typically, no, you don't. Read on to learn who each policy is for, what they cover (and don’t), and how to choose the right protection.
Landlord vs Homeowner's Insurance: Key Differences
Who it’s for:
- Homeowner's insurance (HO) covers owner-occupied primary residences (and, frequently, some second homes while you're staying there).
- For non-owner-occupied residences, such as those with long-term leases or, with certain endorsements, short-term rentals, landlord insurance (also known as a dwelling policy or "DP") is required.
When to change:
- You move out and start renting your former residence.
- You rent out a property that you inherited.
- You buy a vacation or investment property and list it for full-time or seasonal rental.
- You make use of platforms for short-term rentals.
Why it's important:
- You run the risk of having your homeowner's insurance denied or having your policy canceled if you use it on a house that is occupied by a tenant. Prior to listing your property—rather than after the initial incident—give your insurer a call.
What Each Policy Covers (and What It Doesn’t)
Verify what homeowner's insurance covers in comparison to a landlord policy before renting out your home or purchasing a new property.
Typically, homeowner's insurance covers:
- Home repairs following covered hazards.
- Other buildings include fences and detached garages.
- Personal property includes things like your clothes, electronics, and furniture.
- Protection from liability for harm or property damage you cause.
- Your short-term lodging expenses in the event that your house becomes uninhabitable for a covered claim. [https://www.iii.org/article/homeowners-insurance-basics#:~:text=Homeowners%20insurance%20is%20a%20package,damage%20caused%20by%20household%20pets]
Typical contents of landlord insurance include:
- The building and its permanent fixtures.
- If a renter or visitor is hurt and claims negligence (e.g., unsafe steps), the landlord may be held liable.
- Rent that you miss while the house is uninhabitable because of a covered loss.
- Limited personal property of the landlord kept for the use of the tenants (e.g., lawnmowers, appliances). Limits are typically low; if you have expensive items, think about raising them. [https://www.iii.org/article/coverage-for-renting-out-your-home#:~:text=Landlord%20policies%20provide%20property%20insurance,like%20appliances%2C%20lawnmowers%2C%20and%20snow]
Typical optional landlord endorsements:
- Malicious mischief and vandalism
- Law or ordinance (upgrades to the code following a covered loss)
- backup water and sewer
- Equipment breakdown
- Legal fees
- Contents insurance
- Short-term rentals or "home-sharing"
Gaps to know
- Tenants’ personal belongings aren’t covered by your landlord policy. Encourage tenants to carry renter's insurance.
- Maintenance and normal wear aren’t covered (roof age, old plumbing).
- Vacancy periods may reduce or exclude some coverages—check your policy’s vacancy clause.
How Much Do They Cost?
As a general rule, because tenant-occupied properties have different risk profiles (higher liability exposure, vacancy windows, and wear from multiple occupants), landlord insurance is frequently about 25% more expensive than a comparable homeowner's policy. So, if a homeowner's policy costs $1,600, a comparable landlord version may cost about $2,000 per year. [https://www.iii.org/article/coverage-for-renting-out-your-home#:~:text=longer%20period%20of%20time%2C%20say,landlord%20or%20rental%20dwelling%20policy]
Your real premium is determined by:
- Factors related to the property: square footage, construction type, age, roof, and systems.
- Location: Crime rates, fire safety, and local weather hazards.
- Use pattern: Vacancy periods; long-term leases versus short-term rentals.
- Deductible and claim history: Prior losses may cause premiums to increase, but higher deductibles typically result in lower premiums.
Ways to save:
- Bundle your policy with your auto insurance.
- Increase your deductible to the maximum amount that you can afford to pay out of pocket.
- Protect the property with monitored alarms, deadbolts, smart thermostats, and leak detectors.
- Document upgrades like new electrical, plumbing, or a roof.
Responsibilities: What the Landlord Covers vs the Tenant
As the landlord, you’re usually responsible for insuring the structure itself—the framework and any fixtures permanently attached to the property. Your policy also typically covers your landlord legal liability if someone is injured on the premises. Limited coverage may extend to furnishings and appliances you provide for tenant use, subject to policy limits. If you add it, loss of rent coverage can replace rental income while the home is uninhabitable after a covered claim.
Tenants, on the other hand, are generally responsible for their personal property and personal liability, which they cover through a renter's insurance policy. Renters insurance protects the tenant’s belongings and liability and often includes additional living expenses if a covered loss makes the unit uninhabitable. They may also be responsible for deductibles you specify in the lease due to tenant damage, subject to local law. [https://www.ncdoi.gov/consumers/homeowners-insurance/renters#:~:text=Renters%20Insurance%20protects%20your%20personal,the%20event%20of%20a%20loss]
Choosing the Right Coverage for Your Property
When weighing out landlord insurance vs homeowner's insurance, follow these steps:
1. Determine the use of the house for the upcoming 12 to 24 months.
Owner-occupied? Stick with homeowner's. Renting out? Change to the landlord policy.
2. Give a call prior to the start of the lease.
Inform your insurer that you will have a tenant and make sure you are on a properly endorsed policy or a landlord (DP) form, particularly for short-term rentals. If you furnish the rental, you'll want personal property coverage. Working with an agent is especially helpful so that you don't overlook any aspects of coverage options that could negatively impact your rental business.
3. Set reasonable coverage limits.
- Dwelling: Take market value into account, not replacement cost.
- Liability: Many landlords opt for $500,000 to $1M. Consider whether or not an umbrella policy would be helpful in your situation.
- Rent loss: Make a reasonable estimate by adding market rent to the number of months needed for repairs.
4. Select additional endorsements if needed.
Water backup and ordinance/law are common must-haves; add short-term rental endorsements if applicable.
5. Examine your options.
Each ZIP code and type of property has different coverage, endorsements, deductibles, and services. Shopping around makes finding the ideal fit at a reasonable cost easier.
Get Customized Insurance Quotes Today
Insurance options vary by ZIP code and profile, and prices can move quickly. The fastest way to find the right fit is to compare customized options side-by-side. It’s free to get a custom landlord insurance vs. home insurance comparison with us and only takes a few minutes. Prices change daily, so comparing regularly helps you stay on the best rate.
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