Landlord Insurance vs. Homeowners Insurance

Although they sound very similar, landlord insurance and homeowners insurance show many differences in terms of costs and coverage. If you’re on the verge of getting your property insured and don’t know which of these insurance options to choose, read on for a detailed comparison between the two.

This guide includes:

What's Landlord Insurance?

Landlord insurance is a type of insurance that protects the landlord against financial losses that can potentially arise regarding a rental property. These insurance plans don’t cover the property of your primary residence but the properties you rent out to tenants. In addition to covering your property in the case of fire, storm, or lightning damages, landlord insurance also covers you against lawsuits that are claimed against you by your lessees.

What's Homeowners Insurance?

Homeowners insurance provides the property owner with financial protection regarding the property in case it gets damaged by an act of vandalism, severe weather conditions, or fire. 

However, this type of insurance won’t be covering for the damage on your property if you’ve rented it out to someone else, which means you may encounter crushing levels of financial liabilities.

Homeowners vs. Landlord Insurance

It’s best to do thorough research before purchasing something as serious as house insurance. Choosing the right policy will save you a great deal of time, money, and energy, in case your property gets damaged somehow. To help you decide in a well-informed manner as to which plan’s the most suitable for you, we’ve made a list of differences and similarities between landlord and homeowners insurance types.

Landlord Insurance vs. Home Insurance: Similarities

The basic coverage of landlord insurance and homeowners insurance are quite similar. They both tend to prioritize the protection of the property structure against severe weather, fire, accidents, and the like.

1. Both homeowners insurance and landlord insurance can cover personal liability and the medical expenses of the lessees/guests in case of on-property injuries. 

Tenant or guest injuries due to accidents that happen on the property are part of personal liability. The personal liability category is typically included in both insurance policy types. However, it has limitations, which you can stretch by paying more, of course. You can decide to which extent the insurance will cover on-property injuries considering the riskiness of the property.

2. Both insurance types typically tend to protect outer structures in addition to the main property structure.

The main purpose of both insurance types is the protection of the property structure. Therefore both insurances cover the damage done to the property by certain perils and accidents. Landlord and homeowners insurance also covers the detached structures that are part of the property in addition to the primary structure.

Between Landlord Insurance vs. House Insurance: Differences

As illustrated above, homeowners insurance falls a little short of protecting you and your wallet against damage done to the property you rent to other tenants. It doesn’t cover you if the lessee has an injury on the property and files a suit against you, either. 

On the other hand, landlord insurance—on top of covering almost the entirety of items that homeowners insurance does—covers the landlord’s liability coverage in case the lessee gets injured on their property, as well as the structure of the building and related outbuildings. Moreover, if the property is in a state that can’t be inhabitable due to a cause of damage that’s included in the coverage, landlord insurance also may cover the amount of rental loss. However, it doesn’t protect what’s inside the building.

Now that we’ve gone over the basics of landlord insurance vs homeowners insurance, let’s move on to their specific details, which separate them from each other. 

1. Landlord insurance covers your rental properties, whereas homeowners insurance covers your primary property of residence.

Homeowners insurance protects the primary residence of the homeowner. The coverage of the homeowners insurance is comprehensive: it includes pretty much everything that the policy contract doesn’t specifically state as excluded. Damages caused by sudden events, accidents, burst pipes, vandalism, break-ins, lightning strikes, fire, severe snow, wind, and rain are generally included in the coverage of homeowners insurance.

On the other hand, landlord insurance can cover a property regardless of whether or not the landlord resides there. This type of policy is customized to protect the rental properties of the landlords, and hence, covers almost everything that the landlord owns or is responsible for replacing/repairing following an incident included in the coverage. In addition to those perils and events that homeowners insurance covers, landlord insurance also covers accidental damage caused by the lessee.

2. Personal properties are not included in landlord insurance coverage, whereas they typically are included in homeowners insurance coverage. 

Homeowners own both the property and its interior components. Since replacing all the furniture that’s damaged due to an accident or peril would be excessively expensive, homeowners insurance covers the repurchasing of these items, so long as the said event is covered. 

Landlords, on the other hand, typically own the property but not the interior components of it. Therefore, the protection by landlord insurance is limited to the property structure to not overcomplicate the costs. To cover such damage to furniture and the like, the tenants can get renters insurance. If the property is furnished by the landlord, on the other hand, the coverage of the interior properties can be added to the landlord insurance policy for an additional fee. 

3. Landlord insurance covers rent losses deriving from perils included in the coverage, while homeowners insurance typically includes loss-of-use. 

The type of coverage as to the period a property is uninhabitable due to a covered incident varies depending on the insurance type. While homeowners insurance covers the temporary residence and meal expenses of the tenant in case they have to move out for a while due to immense damage following a covered peril, landlord insurance tends to cover the rent loss of the landlord instead of the needs of the tenant. Some further extensive landlord insurance policies even cover the payment for the rent the tenant fails to deliver.

Landlord Insurance vs Homeowners Insurance: Conclusion

Although the most significant characteristics and the general priorities of landlord and homeowners insurance policies resemble one another, they show some crucial nuances. Picking the right insurance policy type for your property and supporting it with add-ons come in handy in case an accident or a peril damages your house, resulting in the emergence of unexpected and heavy costs. 

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