Key Takeaways
- Homeowner's insurance and landlord insurance both protect residential property, but they're built for different situations: living in the home vs. renting it to tenants.
- Homeowner's insurance typically covers the dwelling, other structures, personal belongings, personal liability, and loss-of-use expenses if the home becomes uninhabitable.
- Landlord insurance is designed for tenant-occupied rentals and often includes dwelling coverage, premises liability, some tenant-caused damage, and rent loss protection; add-ons like flood, earthquake, or eviction coverage may cost extra.
- If you're renting out a property, review your current policy and consider switching to coverage specifically designed for rental use, and require renter's insurance where appropriate.
Landlord Insurance vs. Homeowner's Insurance: What's the Difference?
What is Homeowner's Insurance?
Homeowner's insurance protects owner-occupied homes. Though not required by federal and state law, it is often required by mortgage lenders so they can protect their interests as well. A damaged or uninhabitable property doesn't work well as collateral, after all. So unless a home is bought entirely in cash, it's likely covered by homeowner's insurance.
Outside of mortgage lending requirements, this type of insurance is ideal for protecting what is often most people's most valuable asset. Most homeowner's insurance covers damage in the event of fires, burst pipes, tornadoes, and more. It's always important to read the fine print on your coverage though, as many policies do not cover floods and earthquakes.
What Does Homeowner's Insurance Cover?
A typical homeowner's insurance policy will include protections for the following:
- Personal belongings. Many policies include personal property coverage, where your electronics, clothes, furniture, and other items can be replaced in the event of disasters and break-ins.
- Dwelling coverage. Dwelling coverage protects the physical structure, like the walls, floors, and other parts attached to your property, including some appliances. A detached garage would likely not fall under this, while an attached one would.
- Other structure coverage. This is the counterpart to dwelling coverage; fences, sheds, and detached garages are protected with this policy.
- Loss-of-use coverage. If your property becomes uninhabitable, your insurance company will cover hotel stays and additional living expenses.
- Personal liability coverage. If you accidentally harm another person (think dog bites and the like), your liability protection policy may cover the medical bills and other associated costs. With some policies, the accident doesn't have to occur on the property for it to be covered.
Of course, every insurance policy is different. When evaluating coverage options, homeowners should make sure they're prepared for their unique circumstances. In earthquake-prone areas, for example, paying for additional earthquake-specific coverage is likely worth it.
What is Landlord Insurance?
Landlord insurance is designed specifically for properties being rented out and used by someone other than the owner. It's quite similar to homeowner's insurance in the sense that it covers the cost of certain damages that may come to your property. However, homeowner's insurance won't cover your property like a business asset, which is an important distinction.
What Does Landlord Insurance Cover?
Basic landlord insurance policies tend to cover the following:
- Owner's personal belongings. Landlord insurance will protect only the belongings of the owner, not the tenant. Many landlords require renter's insurance, which does cover the belongings of the tenant.
- Dwelling coverage. Similarly to a homeowner's policy, landlord insurance protects the physical rental property structures: walls, floors, windows, etc.
- Premises liability. If someone is injured in your rented units due to hazardous or unsafe conditions, this will cover the legal and medical expenses you're required to pay.
- Tenant-caused damage. For damage that goes beyond typical wear-and-tear, landlord insurance will typically cover associated repair costs.
- Rent loss protection. In the event that your property becomes uninhabitable, rent loss protection will pay you in place of the tenant to help you keep up with mortgage payments. The exact covered losses vary by landlord insurance policy, so be sure to read the fine print with this coverage.
Certain coverage that landlords should also consider may be additional. These include:
- Flood protection. This is often not included in baseline landlord insurance policies. If you have a property in a flood-prone area, make sure you get additional coverage for water damage.
- Acts of nature. Some specific types of damage may not be covered in your landlord insurance, like earthquakes and hurricanes. These may be referred to by some companies as acts of God.
- Eviction coverage. Some policies will offer eviction protection as an add-on, wherein your insurance provider will pay for certain eviction-related expenses, like loss of rent and legal fees.
It's important to note that requiring tenants to purchase renter's insurance can often lower the premium for your landlord insurance policy, saving you cash in the long run.
Landlord Insurance vs Homeowner's Insurance
If you're renting out your property, consider protecting it with landlord insurance. Homeowner's insurance offers very basic coverage that doesn't quite protect your portfolio. Investment properties come with their own set of risks that you need to be prepared for. Without insurance, you're one uncontrollable circumstance away from the end of your business.
To better compare the two types of insurance, we've created a helpful table:
| Homeowner's Insurance | Landlord Insurance | |
|---|---|---|
| Designed for | Owner-occupied residences | Tenant-occupied rental properties |
| Personal belongings | Covers the homeowner's personal property (clothes, electronics, furniture) | Covers the landlord's belongings only, not the tenant's personal belongings |
| Liability coverage | Personal liability coverage for injuries/damage where the homeowner is legally responsible | Premises liability coverage for tenant/guest injuries where the landlord is legally responsible |
| Loss of use | Loss-of-use coverage may pay additional living expenses if you can't live there after a covered loss | Rent loss protection may replace rental income if the unit becomes uninhabitable due to a covered loss |
| Tenant-caused damage | Generally not intended to cover tenant-caused damage (policy assumes you live there) | Often provides coverage for certain tenant-caused damage beyond normal wear-and-tear (limits/exclusions vary by policy) |
Precise coverage varies by policy and insurance company. To get the best protection possible, consider what your investment properties are most prone to, and build your coverage from there with an agent.
Obie & Innago: Affordable Landlord Insurance Today
Innago makes landlord insurance easy. With our partner, Obie, landlords can receive a quote with just the click of a few buttons. The process is completely online and straightforward—perfect for seasoned and budding landlords alike.
Obie and Innago make coverage for tenant-occupied rental properties simple and transparent. We offer key policies like property protection, liability protection, and loss-of-rent coverage. Being a landlord is often a risky business, but the right insurance can support you through the unexpected and unpleasant.
Protect Your Business with Innago
FAQs
Can I use homeowner's insurance for a rental property?
Homeowner's insurance is intended for owner-occupied homes and typically won't cover a property you're renting out like a business asset.
What is landlord insurance?
Landlord insurance is a policy designed for tenant-occupied rental properties that helps cover property damage, liability claims, and certain rental-related risks.
Does landlord insurance cover tenant belongings?
No—landlord insurance protects the landlord's belongings, while tenant personal belongings are typically covered by renter's insurance.
What does landlord insurance cover?
Basic landlord insurance commonly covers the dwelling, the owner's belongings (not the tenant's), premises liability, tenant-caused damage beyond normal wear-and-tear, and rent loss protection if the unit becomes uninhabitable.
What is rent loss protection in landlord insurance?
Rent loss protection can pay you in place of the tenant if the property becomes uninhabitable due to a covered loss.
