Differences between Landlord Insurance and Homeowner Insurance

Differences between Landlord Insurance and Homeowner Insurance

The similarities and differences between landowner insurance vs. homeowner insurance, at times, are just too much to comprehend for some property owners. And we do not blame them. As a landlord or property owner, you cannot opt for one simply because it does not cover losses and obligations of the other; neither does it provide similar compensations. Though, reaching an informed decision will become an easy task by getting a better understanding of the significant features of each. So, we decided to make matters easier for you by researching and coming up with a definite answer to, “what is the difference between homeowner insurance and landlord insurance?”

Let’s get insuring!

Landlord Insurance vs. Homeowner Insurance-Key Difference, Liability and Coverage

When it is about guaranteeing valuable possessions, figuring out what best suits your needs, and covers your demands can be a tricky decision for some insurance seekers. The following are some essential factors to consider when debating the plan of landlord insurance vs. homeowner insurance.

To start with, homeowner’s insurance plans are designed to keep the personal residence of owners in mind. Though, they work as a shield to safeguard property, the owner’s belongings, and cover their obligations in case of any loss or damage. Similarly, landlord insurance is governed by a totally different set of policies and terms, while this policy is designed to protect an owner’s investment as a landlord.

The following are the differences in terms of coverage so you can quite easily decide what is best for you:

  • Residence Structure
  • Associated Structure
  • Loss of Use
  • Liability Insurance
  • Medical Coverage

Residence Structure

The main structure of the residence is the content of coverage in both landlord insurance and homeowner insurance. The coverage, though, might vary on the type of insurance policy you get. Every policy has a set of hazards that a home’s structure is covered against. For example, water damage, hail storms, fire accidents, and some policies also cover damages caused due to vandalism.

Be sure that your insurance agent has notified you about both replacement cost and the actual cash value. Plus, this policy does not only provide insurance against a home structure, and it also covers any damage done to house appliances, as witnessed in the case of natural catastrophes.

Separate Structure

Coverage for a separate structure covers detached structures that are connected to the owner’s property but are not significantly physically connected with the structure of the residence. Some typical examples of separate structures include garages, fences, sheds, storerooms, servant quarters, guest houses, or other detached structures in the same perimeter as your residence. So this coverage is, by default, a part of a homeowner’s policy. Landlords, though, have to explore which institution supports such policies for rental properties.

Loss of Use

Properties, particularly houses, are always at risk of getting damaged by natural events. So, as part of common policies for homeowner’s insurance plans, insurance providers are bound to pay for the owner’s temporary residence in case of house renovations or improvements, particularly when the home is affected by a natural catastrophe and is not in a safe condition to live in.

Rental properties are not any different in such cases and are absolutely in the same danger zone. So, you should be very careful about two things while subscribing to any insurance plan as a landlord. Firstly, a backup residence for your tenants when your rental property becomes inhabitable. Secondly, a backup for yourself if you are unable to generate monthly income through rent.

Liability Insurance

The majority of property owners make their decision based on straightforward logic. For them, the key difference between landlord insurance and homeowner insurance is that if the house serves as their primary residence, they opt for homeowners’ insurance. While, if they are renting it out for an extended period, let us say a year, they need landlord insurance.

Though, when it comes to liability insurance – that is when a homeowner’s insurance plan does not provide the same advantages as a landlord insurance plan. It is understandable since the homeowner’s responsibilities are totally different than what is expected from a landlord. This even applies to if you are living in the same property you are renting, because you still require greater liability protection. This is particularly true for cases when someone files a lawsuit against you for negligence.

Landlords have much less control over their investment property, no matter if they rent their property for a long period or a short period. So, choosing for homeowners’ insurance is not the safest bet for landlords in such cases.

Medical Coverage

A simple homeowner’s insurance plan does not provide medical recovery if someone is hurt on your rental property. Let’s suppose there is an unidentified hazard on your property, and someone gets severely injured and requires special medical attention. In such a situation, a landlord’s insurance could cover this sort of expense while a homeowner’s insurance plan does not provide any coverage for such cases.

Although, if you still cannot decide which one to opt for, we have another easier way to explain the key difference between landlord insurance and homeowner insurance. If you want to convert your residence into a full-time rental property, it is recommended to get a landlord’s insurance plan. On the other hand, house insurance is a better fit if you plan to have tenants occasionally only.