Landlord vs. Homeowners Insurance: What You Need to Know

Insurance gives financial security and peace of mind to homeowners and landlords. However, selecting which coverage is best for you requires understanding the distinctions between homeowners and landlord insurance.

Coverage provided by a landlord policy vs a homeowner policy

While both landlord and homeowners insurance are acquired by property owners, they do not cover the same things and are not intended for the same people. To begin, homeowners insurance applies to owner-occupied homes, whereas landlord insurance applies to houses that the owner leases out.

Let’s look at how coverages differ and where they are comparable.

Landlord insurance protects structural damage, whereas homeowners insurance covers more personal property.

Landlord insurance and homeowners insurance both cover damage to a property’s structure, such as windstorms, hail, lightning, theft, or vandalism. Personal property coverage for landlord-owned property, such as refrigerators, washers, dryers, and other appliances and tools, is frequently included.

Homeowners insurance covers the personal goods of the homeowner, while landlord insurance normally does not cover the personal items of individuals residing on the property. Tenants require renters insurance to protect their personal items against insured losses.

Both homeowners and landlord insurance policies cover loss of usage.

Loss of use implies that if a home becomes uninhabitable and inhabitants are forced to go, insurance companies will step in to pay. However, this creates different conditions for homeowners and landlords. When it comes to what homes insurance covers, loss of usage often covers any required hotel or accommodation fees as well as any additional living expenditures over and above a household’s normal budget.

Damage makes it hard for renters to dwell on a landlord’s property, resulting in a loss of rental income. As a result, landlord insurance can assist compensate landlords for lost revenue, but it cannot cover renters’ additional living expenditures.

Both contain personal liability insurance.

While the specifics of personal liability protection may differ depending on the policy and insurance type, liability insurance is usually included in some form for both homeowners and landlord insurance. Personal liability insurance covers accidents or unintentional property damage that occur on rental and homeowner properties, as well as legal bills and court costs in some circumstances.

For example, if a delivery worker slips and falls on black ice and requires medical attention, both homeowners and landlords are normally liable if the harm occurred on their property.

The cost of landlord insurance vs homeowner insurance

According to the Insurance Information Institute, landlord insurance is around 25% more expensive than homeowners insurance for the identical property. This is due to the fact that there are higher dangers involved with tenant-occupied dwellings, such as property damage caused by tenants or their visitors, than with individuals who own and live in their own houses.

Keep in mind, however, that insurance policies may be tailored to your personal needs, and the cost of coverage is determined by a variety of criteria, including the location of your property, its condition, and the deductible you choose.

Do you require landlord or home insurance?

Landlord and homeowners insurance are not needed by law, but if you receive a mortgage for a house that you will either occupy or rent out, you will be forced to purchase either homeowners or landlord insurance. Even if you don’t have a mortgage, acquiring insurance is a must since you don’t want to be on the hook for large, unexpected payments.

If you own a house and want to provide short-term rentals, such as through Airbnb, you’ll need more insurance. Some homes insurance firms provide this extra coverage or different policies entirely. Furthermore, while Airbnb provides up to $1 million in coverage per rental, it does not cover everything.

In whatever position, becoming a property owner is a rewarding investment. But, before you embark on your adventure as a property owner, you should be aware of the hazards and expenses involved, as well as what landlord and homeowners insurance covers and does not cover. Lemonade has your back every step of the way, from finding you the greatest insurance coverage to assisting you with compensation if an unfortunate occurrence occurs.

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