Table of Contents
Landlord Insurance vs. Homeowners Insurance:
As a property owner, I’m sure you have wondered: What is the difference between landlord insurance and homeowner’s insurance?
Both Landlord Insurance and Homeowners Insurance are types of property insurances. Though they sound similar, they have different use cases and coverage.
Homeowners Insurance is insurance for owner-occupied residential property – the owner stays in the property bought by them and is insured for the same. It is one of the common types of insurance that almost all homeowners adopt. It acts as a safety net against any risks and liabilities that arise from having a home.
Landlord Insurance is insurance for tenant-occupied residential property – the owner get insurance for his property which is let-out and occupied by a tenant. This insurance is specifically created for homeowners who have let out their property, be it an apartment, condominium or multiple units.
Key differences:
Coverage:
Homeowner’s insurance protects home structure during a disaster such as a fire or a storm. It covers all personal property within your home as well. On the other hand, landlord insurance will cover the physical structure of the property; if the rental property is unfurnished, then the contents inside the property will not be covered. This policy will also cover landlord-specific risks such as damages caused by tenants, loss of rent, and more.
Cost:
Landlord insurance usually costs more than homeowners insurance because it covers additional risks of the rental property. Factors such as location, size of property, and condition of the property will determine the cost of the insurance.
Liability coverage:
Homeowners insurance protects the homeowner against liability of any damage to the property caused by the family member or resident of the household. For landlords, their insurance protects the property from damage caused by the tenant or any other third party.
Loss of use and loss of rental income:
If the residential property is temporarily uninhabitable (in case of a natural disaster, theft, etc.) the homeowners’ insurance will cover additional living expenses for the homeowner. Similarly, for landlords, if the property is damaged or cannot be let out, the insurance will help recover the lost rental income.
Do you need landlord insurance?
The short answer to whether you need Landlord insurance is Yes.
The long answer is that though landlord insurance might be expensive, it will save you costs and benefit you in the long run.
Even with the best of the best tenants, accidents could happen, leading to damages to the property and the structure of the property. When this occurs, not only do you have to pay for the damages, but you could also lose out on rent if the property is uninhabitable.
Having tenants could also lead to legal issues, such as if the tenant is injured on the property, and these are time-consuming and costly. With the help of insurance, you will be able to cover legal fees, settlement costs and medical bills if any.
How do we reduce Landlord liability?
Landlord insurance is there to protect us in case of any unforeseen circumstances. However, as a landlord, it is equally important to take precautions against these situations. Here are a few ways to reduce landlord liability:
Maintain your property: as a landlord, you need to ensure regular preventative maintenance is done for your property, providing a safe, habitable living space for the tenant. This also reduces the risk of accidents and damage to the property.
Qualified tenants: While looking for a tenant, ensure that the tenant is qualified. They should have a good rental history and must be capable of maintaining the property. These kinds of tenants will reduce the risk of property damage and allow you to live stress-free.
Clear lease agreements: While onboarding tenants, ensure that you have a well-defined lease agreement with your tenant. This will help reduce any legal problems that might arise.
Prompt maintenance: In case the tenant complains of any maintenance required, the landlord should prompt address the complaint. This helps improve the life of the property and asset and will reduce large costs that may arise in the future.
Legal requirements: Ensure your property is up-to-date with other legal requirements such as municipal laws, building codes, health and safety regulations, etc. reducing risk and liability for both you and your tenant.
Conclusion:
Homeowners and Landlords insurance is essential when is comes to property insurance and protection. However, it is essential to understand the purpose of each of the insurance and the difference between them, before investing in them.