Differences Between Homeowners Insurance And Landlord Insurance

Chapters:

0:00 What is the difference between homeowner insurance and landlord insurance?

0:12 What is homeowner insurance?

0:50 What is landlord insurance?

1:33 Which type of insurance costs more?

2:04 How can landlords reduce the cost of their insurance?

2:47 Find out more

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First, it's important to purchase the right kind of insurance policy for the usage type. In fact, whether a claim is covered may depend on having the right type of policy in place. As an example, if you decided to open a car rental business and buy a fleet of cars, you wouldn’t insure the rental cars on your personal auto policy. The risks are different — and the insurer won’t cover claims because the policy doesn’t match the real risks. Insuring your investment real estate follows the same logic. Even for a single-family home you lived in previously, if you decide to rent the home out, the risks change. You’ll need a landlord insurance policy for long-term rentals. Frequent short-term rentals need special coverage as well.

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Landlord insurance covers similar risks to those that homeowners insurance covers, but there are still some key differences. Many landlord insurance policies are all-risk policies that cover all types of property damage — except for those excluded by the policy. Exclusions are often limited to preventable losses, such as neglect or intentional property damage, and risks tied to location, such as earthquake or flood coverage.

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Expect coverage for common risks such as fire, theft, vandalism, and many types of water damage, although flood damage typically requires a separate policy. However, your landlord insurance policy also offers expanded liability protection, often with higher limits than you’ll find on a standard home insurance policy. Investment property owners have more to protect and potentially face greater exposure because renters may not be as careful with the property.

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A helpful way to view the difference between homeowners insurance cost and landlord insurance cost is to think of your homeowners insurance policy earning a discount because the property is your primary residence. Your insurer has a greater assurance that you’ll be on guard against risks and take precautions to prevent claims if the property is owner-occupied.

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While these property insurance types are similar, your homeowners insurance company may not offer landlord insurance. Again, this is likely because the risks are different based on who lives in the home.