Understanding Homeowners vs. Landlord Insurance

Owning property comes with the responsibility of securing the right insurance coverage. For property owners who rent out their homes, understanding the nuanced differences between landlord insurance and homeowners insurance is crucial, as failing to do so could lead to extensive financial losses. 

What Is Landlord Insurance? 

Landlord insurance, often called rental property insurance, protects property owners from risks associated with leasing homes and residences to tenants. One primary feature of this insurance is coverage for the physical structure of the rental property. This includes financial protection for the building’s core components, such as the roof, walls, and foundation, from various perils, including fires and some weather-related incidents. 

Liability coverage is another crucial element of landlord insurance. This coverage can financially safeguard landlords from legal and medical expenses if a tenant, visitor or other third party sustains an injury on the property. Additionally, it may cover a tenant’s property damages resulting from the landlord’s negligence, providing an extra layer of financial protection. 

Loss of rental income is another financial protection generally included in rental property insurance. If a covered incident makes a home temporarily uninhabitable, this coverage can compensate landlords for income lost during property vacancy, mitigating financial burdens associated with periods of unoccupied rental units. 

What Is Homeowners Insurance? 

Homeowners insurance is primarily intended for individuals who reside in the home they own and often covers both structural elements and contents. While these policies are generally tailored for owner-occupants, there are specific scenarios where homeowners insurance may be a viable option for landlords. 

If a landlord lives in one of the units within a multi-unit property, homeowners insurance may be extended to cover the entire structure. Homeowners insurance may also provide some coverage if a landlord rents out a single room or part of their own residence, as well as for short-term rentals or isolated situations where property owners do not regularly have tenants. In these situations, landlords may require an endorsement and should also ensure they notify their insurance company of their intentions. 

Choosing the Right Insurance 

The decision between landlord insurance and homeowners insurance for landlords hinges on their specific circumstances. If the property is exclusively used as a rental, landlord insurance should be chosen. However, there may be certain situations in which homeowners insurance could suffice. 

Selecting the appropriate insurance for landlords involves carefully considering the property’s use and the associated risks. Landlords must assess their unique situation and ensure they have the right coverage to protect their investment and financial well-being. 

We’re Here to Help 

As a bilingual agency in Homewood, Alabama, Servi-Express is well-equipped to help landlords and homeowners understand their insurance needs and secure optimal coverage. Contact us today to learn more. 

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.