Suppose you hope to start renting your property full-time; what type of insurance policy should you have in place to protect your property when tenants live there? In most cases, you’ll need a landlord insurance policy. However, if you’re only hosting tenants occasionally, a homeowners policy is a more suitable option.
Rental Agreement Determines Type of Insurance
If you want to rent out your home temporarily, for instance, to host sports fans coming to your area for a sporting event, your homeowners’ policy is sufficient to provide coverage. Your home insurance policy can cover damage resulting from certain risks, like break-ins or fires, if you lease your house on certain occasions. However, you can’t buy a homeowners policy if you don’t reside in the home. You should consult your insurance agent to learn about homeowners insurance facts and to figure out the kinds of scenarios that are either covered or not covered by your homeowners’ insurance policy where you have tenants occupying a room in your home. If yours is a single-family home, or investment property/second home, that you intend to rent full-time, then you should consider getting a landlord insurance policy because homeowners insurance policies typically don’t provide protection in this scenario.
Homeowners Insurance Vs. Landlord Insurance
Landlord insurance policies are similar to homeowners policies. They cover the building (as well as other structures on your property, such as fences and sheds) in case they’re damaged by named perils. However, to get a homeowners policy, you must live in the property. A homeowners policy can provide coverage if you live in a single-family house and lease a room to tenants. It also depends on the length of the tenants’ stay and the number of individuals renting. The extent of coverage varies with policy and insurer, and so should you talk to your insurance agent before you host a tenant in your home. If you intend to rent out the entire property to tenants, you likely need landlord insurance.
Key Differences Between Homeowners Insurance and Landlord Insurance
- Personal Property Coverage – Homeowners’ insurance can cover personal belongings, including clothing, computers, and furniture. In contrast, landlord insurance policies usually only cover items used in servicing the rented property. Therefore, if rented property houses some of your personal items, your landlord policy will most likely not cover them. It can, however, cover items used to maintain your property, such as a lawnmower or snowblower.
- Liability Coverage – Landlord insurance usually covers liabilities related to the rented premises. If a renter is injured on your property and you’re held liable, the landlord policy’s liability coverage can cover the associated legal fees and medical expenses. On the other hand, the liability coverage that comes with homeowners insurance usually covers members of your household whether the incident happens in or out of your home.
How Renters Insurance Protects Your Tenants
Landlord insurance, as well as homeowners insurance policies, typically don’t cover renters’ personal belongings. So, you should consider including renters insurance in your lease conditions. A renters insurance policy covers the tenants’ personal property and provides some liability protection. Before you invite renters into your home, you should consider the risks involved, read your policy and talk to your agent to ensure you have sufficient insurance coverage.