Landlord Insurance Vs. Homeowners Insurance: Key Differences

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Landlord Insurance Vs. Homeowners Insurance: Key Differenceslandlord insurance vs. homeowners insurance

What is Landlord Insurance?

Just because you’re a homeowner doesn’t mean you need homeowners insurance. Confusing right? Yeah, we agree. But if you’ve decided to turn your property into a rental (and you don’t live in the property yourself), that means you’ll need a different kind of insurance: landlord insurance. This type of policy — sometimes called rental property insurance or investment property insurance — protects your property once it’s been rented out.

What is Homeowners Insurance? 

“Okay, I think I follow,” you say, “but I still need to insure the property I live in, correct?” Right in one. If you’ve purchased a property and plan to live there, then you’re considered a homeowner. And that’s where homeowners insurance comes in: it provides a financial safeguard against covered perils and hazards for the home you live in. In short, a homeowners policy is designed to protect your primary place of residence only.

The Differences Between Landlord vs. Homeowners Insurance

While most of us know whether we are landlords or not, not everyone knows the difference between landlord and homeowners insurance. And that makes sense, because insurance jargon can be tricky! 

However, there are some specific differences between the two types of coverage that can help you understand which to invest in. We’ll break those points of distinction down below.

Type of Property Covered

Both landlord and homeowners insurance cover residential dwellings and thus provide protection for your financial investment (aka your home). But landlord insurance only covers rental properties, while homeowners insurance covers your permanent residential address.

Each type of insurance pays out benefits should the home's structure sustain damage in a covered (or named) peril. Named perils depend upon the provider, but they tend to include damage caused by: 

  • Smoke or fire
  • Vandalism
  • Break-ins
  • Water damage from leaky pipes
  • Certain weather events (remember: flood protection requires additional coverage)

In the case of landlord insurance, covered perils should also include damage caused by tenants.

Most landlord and homeowners policies will cover other buildings on the premises, like a shed or studio. But if you own a crazy property, then it’s a good idea to customize your policy to meet your needs. And of course, we always advise you to read through your policy closely so you’re aware of any excluded perils — and can increase the coverage you need accordingly. 

Liability Coverage 

Accidents happen, which is why there’s liability coverage. 

Liability insurance protects you if an accident occurs on your property. Let’s say a delivery driver slips and falls on the stairs up to your day. In that case, a liability policy will cover their medical bills. Or if a branch from a tree in your yard crashes through a neighbor’s window, your insurance will pay to repair the damage. And if said neighbor sues you for negligence, liability protection will pay your legal fees. 

Luckily, both landlord insurance and homeowners policies come with liability insurance.

Loss-of-Use Coverage

Hell hath no wrath like Mother Nature. And sometimes your home is in her way. Both landlord insurance and homeowners insurance include coverage for many natural disasters and other incidents that might render the property uninhabitable. 

There’s a difference, though, in what those benefits look like: While homeowners insurance provides loss-of-use benefits, landlord insurance covers loss-of-rent.

The loss-of-use provision will help to cover living expenses so you can reside elsewhere if your home needs repairs. On the other hand (but in the same vein), loss-of-rent covers missed rental income if your tenants need to live elsewhere as your property gets fixed.

Depending on the policy, you may also be entitled to loss-of-rent benefits if your tenant dies or stops paying their rent for any other reason.

Personal Property Coverage

Here’s another big difference between the two policy types. Homeowners insurance typically protects the contents of a home, while landlord insurance does not

Insurers figure that homeowners are living with their stuff, and so they view the house and its contents as part of the same package. So if you have homeowners insurance, your personal property will be protected.

Landlord insurance is a different story. While some landlords do rent properties that are partially- or fully-furnished, the assumption is that most of the stuff in the rental unit belongs to the tenant. So if, as a landlord, you’ve installed appliances or furniture in a rental property, you might want to consider personal property coverage in case any of those items sustain damage.

You might also require that your tenants have renters insurance — most landlords do! That way, your renters’ belongings are covered. At the very least, it’s smart business to inform your renters that your insurance won’t repair or replace their personal property if items are damaged or stolen.

Premium Costs

Alright, let’s talk money. According to the Insurance Information Institute, the average homeowner’s insurance policy costs nearly $1,300 annually. The cost of landlord insurance is roughly 25% more.

But no matter what type of policy you have, your premiums will be dependent upon a number of different factors, including: 

  • The risk of natural disasters in your area
  • Your credit profile
  • Structural specifics regarding your property, such as roof type and building age
  • The type of policy you choose

Fortunately, there are ways to reduce your landlord or homeowners policies. You can:

As a landlord, requiring tenants to have renters insurance and prohibiting smoking on your property can also help reduce premiums. You can ask your insurance carrier about discounts and other ways that you might be able to save.

And of course you can always shop around for new coverage to ensure you’re getting the best deal!

Which Type of Insurance Should You Choose?

Still not sure what type of insurance you should get? No worries! 

Some situations are cut-and-dried: If you own a home and live there, then you need a homeowners policy. Likewise, if you own a property and rent it out, then you need landlord insurance. 

But some situations are little less clear:

  • If you have an owner-occupied dwelling — meaning you rent out part of the property but live in the other half — you should have both homeowners and landlord insurance.
  • If you live in the home but occasionally use it for short-term rentals like Airbnb, you may want a rider for your existing homeowner's insurance policy.
  • If you let a friend of a friend of your cousin stay with you for a week in exchange for a bit of cash, you can probably skip buying the landlord insurance policy

Regardless, it’s always good to chat with your provider if you’re unsure about what coverage you need.

Find the Coverage You Need with Marble

When it’s time to insure your property, you can turn to Marble. Whether you need homeowners insurance or coverage for your rental property, Marble can help you find the best policy for your needs. Check out the Marble Marketplace to shop around, and once you’ve gotten your new coverage, you can add it to your digital wallet. And as a bonus, you’ll earn rewards just for having insurance. Get started today!