Whether you’re a homeowner who is living in your residential property, or a landlord who rents the property out to tenants, you need to maintain adequate insurance coverage to protect the house. Homeowners’ insurance policies often differ from landlord insurance policies, so it’s important to know the differences so that you get the right coverage to suit your needs. This is namely because your priorities will likely be much different than those of your tenants, so there’s a greater potential for liability when you’re not living on-site and able to see what goes on from day-to-day. There are different provisions for both of these types of policies; let’s take a look at how they compare.
Homeowners Insurance vs Landlord Insurance
Homeowners’ Insurance Coverage
Dwelling Coverage: this is the part of your policy that covers damage to the living areas within your home. If there is any physical structure damage, your dwelling coverage will provide compensation to make the repairs.
Liability Coverage: your liability coverage may sometimes be two-part—personal liability and medical payment. Personal liability coverage protects you if you are found responsible for someone’s bodily injury or property damage. This is the case even in events that don’t take place at your home, such as an auto accident. If you’re sued after a car accident, your personal liability insurance will protect your real estate equity from being up for grabs. Medical payment coverage will compensate the medical expenses incurred by someone who is injured on your property for a specified period of time. Medical payment coverage also protects you in events that happen away from your home, but only if you, someone else on your policy, a household employee, or your pet causes the injury.
Personal Property: this covers the replacement or repair of any property you own within the house. There are certain limitations of personal property coverage, so it’s important to check with your provider to see what kinds of items they exclude from their coverage policy.
Loss of Use: if your home is damaged so badly that you need to evacuate while it’s being repaired, this coverage will provide the financial support to sustain you and your family in a remote dwelling until you can return home. This may be in the form of rent for an apartment, or an extended stay at a hotel, depending on the circumstances. There is usually a time limit on the duration of loss of use coverage, so you need to confirm that with your provider.
Other Structures: this provision of your homeowners’ insurance protects any structures on your property that are detached from your house, such as a garage or shed. This protection will replace or repair damage to any of these structures.
Landlord Insurance Coverage:
Dwelling Coverage: this coverage protects the same things as dwelling coverage does for a homeowners’ insurance policy. The difference, however, is that oftentimes the dwelling space of a rental property contains less expensive/intricate workmanship when it comes to the structure of the home. For example, if you live in a home, you’re likely to put in the highest quality molding and fixtures that you can afford, because you’re proud of your home. If you rent your property, you are less likely to go all out with the details of the home, because you can’t be sure that your tenants will treat your house with the same respect you would as a homeowner. For this reason, dwelling coverage can often be reduced for landlord insurance policies.
Liability Coverage: this is the part that’s significantly higher for landlords. Remember when we mentioned that your liability is greater when you can’t monitor what’s going on at your property every day? This is where that becomes a reality. As a landlord, you can’t control who comes and goes through your rental property, because you’re not there to police your tenants (and also because it’s not your job to do so). If something happens on your property, chances are the lawyers will come knocking on your door (the one at the house you live in!), because you’re the property owner. You need to have adequate coverage for any unseen liability issues, which is why liability coverage is one of the most expensive provisions for landlord insurance.
Personal Property: as the landlord, few things that you own are probably in your rental property. As such, you have very little reason to have coverage for personal property, because your tenant’s possessions should be covered under their renters’ insurance policy. If they don’t have adequate protection for their assets, that’s not really your problem!
Loss of Income: this is similar to a homeowners’ insurance policy’s loss of use coverage. If your rental property is damaged and your tenants can’t live there while it’s being repaired, you don’t have to worry about finding somewhere else to stay, but you will be losing out on collecting rent while the tenant isn’t paying. Loss of income coverage helps you maintain your mortgage payments while your property is unoccupied while it’s being repaired.
With the differences in Homeowners’ Insurance and Landlord Insurance requirements, it’s debatable which will cost you more. Oftentimes, because of the liability coverage, Landlord Insurance can wind up being more expensive than Homeowners’ Insurance, but the best way to find out how much you’ll have to pay is to get a few quotes from some reputable providers. Get your free quotes today at InsuranceQuoteOnline.com!