Landlord Insurance vs. Homeowners Insurance: What’s the Difference?

Landlord Insurance vs. Homeowners Insurance: What’s the Difference?

Landlord Insurance vs. Homeowners Insurance: What’s the Difference?

In the property management field, many things are considered vital. It includes the office, staff, tenants, and the rental property.

However, the most critical factor is the one that can be a protection to all the assets. And that is insurance.

There are several kinds of insurance, including homeowners insurance, renters insurance, landlord insurance, and property management insurance. And this kind of insurance covers different features. Through this article, I will discuss landlord insurance and homeowner insurance. 

Coverage: Landlord Insurance vs. Homeowners Insurance

People are mainly concerned with coverage when it comes to an insurance policy. 


Where the insured resides

The difference between these two policies is where the actual residence of the insured. 

  • Homeowner insurance-  the insured must have his residency and the tenant within the property. The person paying for the insurance must reside on the property.
  • Landlord insurance– the insured does not require to live in the insured property. The person paying can reside anywhere, on the premises, on the property, or remotely. 


Damaged protection

Homeowners and landlord insurance cover the following:

  • fire
  • lightning
  • wind
  • water
  • hail
  • other covered events

It applies to the main building and other structures part of the insurance policy.


Personal property coverage

  • Homeowners insurance– the property is mostly covered for a particular event, including furniture, clothing, and electronics. 
  • Landlord insurance covers another range of things, including items owned by the owner and used to service the rental property, such as maintenance equipment, furniture, and appliances that the tenants are using.

Liability coverage

  • Homeowners insurance– if the property damage is caused by you or family members to others. Regardless of where the damage takes place, you are still protected.
  • Landlord insurance– covers accidents that happen on the rental property premises. The liability coverage will help you to pay legal charges against you.


Tenant personal belongings

The homeowner and landlord insurance have the same regarding the coverage of tenant personal belongings. 


Any insurance is actually costly, especially when you have a comparison of the amount of money that you can save. 

  • Homeowner’s insurance-commonly costs around $200 a month for the full policy. It maybe seems pricey, but it’s essential to have this policy so that it can save you more in the future.
  • Landlords insurance– it’s a bit higher than homeowners insurance, about 20 percent higher than the price of the homeowners’ insurance. The reason is that this insurance covers more than the homeowner’s insurance.

However, if you don’t want to pay that much for insurance, several ways to reduce the price are listed below.

1. Maintaining the property

If the property is regularly maintained, it will have fewer claims. It means that the insurance will be lower for those properties. So, always make sure to maintain your property in good shape for a chance to pay for lower insurance.

2. Prohibit smoking

Smoking on the property will likely increase the risk of property damage and give a not-so-good smell. 

3. Require renters insurance

A tenant carrying a renter’s insurance is another way to reduce the cost of property insurance. In this kind of insurance, the tenant’s personal property is protected.

4. Adding safety equipment 

The insurance price may be lower if the insurance company knows that the property is safe and secure. Install alarms, security cameras, and motion detectors are ways to achieve the safety and security of the property.

Deciding Between Homeowners Insurance and Landlord Insurance

Here are common scenarios that will let you know which insurance you should choose.

1. Renting out a room in your home

A homeowners insurance is acceptable if you’re renting out a room in your home and still reside there. It means that you can bypass landlord insurance. And it’s because the landlord insurance is commonly saved for the landlord’s home, and that is inside of the landlord’s house, including tenants. Moreover, homeowner’s insurance serves as a protection for the homeowner, and it will be enough if you are just renting out a room in your home.

2. Short-term rentals

There are things to consider when renting out for a short period. Homeowners insurance is enough if you are residing out of the property. However, if you are renting out a distant property, you may consider landlord insurance so that every situation is covered.

 3. Renting the entire home

Landlord insurance is a must if you’re moving out completely of the property and renting it out. It will ensure that all the structures on the property are covered. It will also cover anything that remains on the property that is used to maintain it. The liability coverage includes the landlord’s insurance even though the protection is small. But it pays any legal fees, medical expenses, and court costs.

Types of Landlord Insurance

Here are the three common types of landlord insurance.

1.DP-1 policies (Dwelling-fire form 1)

It’s the most basic choice for landlords. It is a named peril policy and covers 10 perils that are listed in the policy. These policies cover that if the home is damaged, you will only be reimbursed for the decrease in value of the property’s rebuild. It’s also the cheapest and least popular option for landlords and be avoided as much as possible.

2.DP-2 policies (Dwelling-fireform 2)

It offers a little more comprehensive than the DP-1. The coverage is against 16 perils and covers the replacement cost value for your property. So, if your tenant will burn down the building, a decrease in value is not factored into the cost of the rebuild of the building. You will also save about ten thousand dollars in expenses if there’s a total loss. And it’s much worth it if there’s an additional premium.  

It also includes loss-of-rent coverage, which will give you supplemental rental income if the rental property is being repaired from the damages from a covered hazard. But it will not cover your property if it is vacant for more than a month.

3.DP-3 policies (Dwelling-fireform 3)

It’s the most common and comprehensive among the types of landlord insurance. These are used to insure non-owner-occupied homes and vacant properties. It’s open to all perils, which means that the property covers every hazard except the one explicitly listed in the policy. And it includes RCV and loss-of-rent coverage.

Final Thoughts

Deciding on which insurance to buy is crucial. But always keep in mind the difference between the insurance you will be getting and which one is suitable for your situation. And you must also be reminded that it will save you some money someday if you get insurance for your rental property.

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