Landlord Insurance vs Homeowners Insurance (5 Key Differences)

Owning a rental property can help you build your wealth in two ways: you earn money from the rent you charge tenants and build up the property’s value over time. 

Since property ownership comes with risks, you must have the right insurance to protect yourself.

There are different types of property insurance available, and what’s covered can vary a lot. As a landlord, you may face additional liability risks, so make sure you have the coverage you need. 

You may believe you’re covered with homeowners insurance; however, this might not be the case if you have tenants. That’s where landlord insurance comes in. 

But which one should you choose: landlord insurance policy vs homeowners insurance policy? 

Fret not! This article will explain everything you need to know about these two types of insurance, including their differences and how much they cost. 

Key takeaways

• Home insurance helps cover a home occupied by the owner, while landlord insurance is for a property where tenants live.
• Both landlord and homeowners insurance offer similar coverage, but the details may differ.
• Landlord insurance usually costs more than a home insurance policy because it covers different risks.
• Home insurance may be enough if you rent out just one room in your property. However, it’s best to contact your insurance company to determine which type of insurance is best for you.

What are the key differences between landlord insurance and homeowners insurance?

Most homeowners wonder, "Do I need both homeowners insurance and landlord insurance?" Understanding the difference between both types of insurance can help with this.

Although there are many ways to set these two apart (and we’ll discuss them more thoroughly in the next section), the primary difference between landlord insurance and home insurance is the property's use. 

If you live in your home, homeowners insurance is your go-to policy. But if you rent out your property, you need a landlord insurance policy. 

Let’s explore a few crucial differences between landlord and homeowners insurance:

Property use

Landlord insurance applies when a property owner rents their home or another property to tenants. 

This insurance protects the property owner from potential risks associated with being a landlord, such as tenant damage or loss of rental income.

With this in mind, one must ask, "Do I need homeowners insurance for a rental property?" Homeowners insurance is designed for owner-occupied properties. In other words, policyholders must be residents of covered homes.

It helps protect the property owner's home and personal belongings from risks such as theft, fire, or natural disasters.

Coverage

Landlord insurance typically covers the physical structure and loss of rental income if the property becomes uninhabitable due to damage. 

It may also include liability protection if a tenant or visitor is injured on the property.

Homeowners insurance helps cover your home, personal belongings, and additional living expenses if you need to live elsewhere temporarily due to a covered event. 

The coverage also provides liability protection for injuries that occur on the property. 

Homeowners insurance vs landlord insurance - coverage differences 

Landlord and home insurance are both types of property insurance, but they differ in the coverage they offer and the risks they manage.

Like house insurance, landlord insurance typically provides dwelling coverage (the building or actual structure of your home) and other structures coverage, protecting sheds or fences against damage from covered events like fire, wind, lightning, or hail. 

However, the key difference is that, unlike landlord policy, homeowners policy only provides coverage if you live in the home or property. 

Home insurance may provide coverage if you reside in your single-family home and rent out a room, depending on the number of tenants or the length of their stay. Coverage can vary by carrier, so checking with your provider before renting a room is best. But if you plan to rent out your entire home, you’ll need landlord insurance.

Besides that, here are some other key differences between home and landlord insurance in terms of coverage options:

Personal property coverage

Although homeowners and landlord insurance help cover damage to your primary structure and any detached structures, they differ in personal property coverage.  

For instance, your home insurance covers everything on the property, including personal property such as jewelry, silverware, furniture, sports gear, clothes, and other personal items if they are stolen or damaged by hurricanes, fire, or other covered events.

In addition, most insurance carriers offer coverage of 50 to 70 percent of the value of your home’s structure. This also includes off-premises coverage, which means your personal belongings are protected anywhere in the world – unless you choose not to have this feature.

The same is not the case for landlord insurance. It doesn’t cover your personal belongings. 

However, landlord policies can be structured to include items you provide for tenant use, such as furniture, appliances, or gardening equipment, but this usually comes with an additional cost.

Does landlord insurance cover the tenant’s personal property?

Landlord insurance doesn’t provide coverage for tenants’ personal property. Based on state and local landlord-tenant laws, landlords may require tenants to have renters insurance. 

Often called tenants’ insurance, renters insurance helps protect a tenant’s personal belongings, covers defense costs if they are involved in a lawsuit, and provides living expenses if they need to move out temporarily during repairs. 

Your landlord insurance company may also require that your tenant has renters insurance.

Loss of use vs the loss of rent

Both landlord and homeowners insurance offer coverage when your home or property becomes uninhabitable – and under repair. However, the type of coverage varies. 

Home insurance offers loss of use coverage. This means the insurance provider will pay for your living expenses, such as hotel bills and meals, if your house becomes unfit to live in due to a covered event.

On the other hand, landlord insurance provides “loss of rent” coverage – or rental income reimbursements. 

If the property is unlivable because of a covered peril, the landlord will get the rental income they would normally collect if the tenant were still renting. 

This helps a landlord cover expenses such as utility bills and mortgages while the property is being repaired.

Liability coverage

Does landlord insurance provide the same personal liability coverage as home insurance? Probably not!

Typically, your landlord insurance policy only covers liability related to your rental property. If the tenant gets hurt in the house you rent and you are found legally responsible, this coverage can help pay their medical bills or legal fees.

Meanwhile, homeowners insurance covers you, your family, and your pets – whether the accident happens in your house or elsewhere.

Landlord insurance cost vs homeowners insurance cost 

When comparing the costs of landlord insurance vs homeowners insurance, many wonder, “Is landlord insurance more expensive or cheaper than homeowners insurance?”

Landlord policy is typically more expensive, and the primary factor is risk. Unlike homeowners, landlords experience a range of additional risks, such as tenant-related damage or loss of rental income.

Home insurance typically costs less because it covers owner-occupied properties with lower risks. 

However, various factors can influence both landlord insurance costs and homeowners insurance costs, including the property's location, condition, and the level of coverage chosen.

To give you a better idea of costs:

• Homeowners insurance costs: The average cost of home insurance is $2,950 per year. At first, it may seem unnecessary, but it could help you save hundreds and thousands of dollars in an emergency.  
• Landlord insurance costs: Landlord insurance policy typically costs 25% more than homeowners insurance due to the added risks landlords face

Which insurance is the right one for me?

Whether you need landlord insurance or homeowners insurance depends on how you use your property.

Here are a few factors to help you determine which policy between home insurance and landlord insurance is best for you: 

Renting out an entire residence

If you're moving out of your primary or secondary residence and renting it out to tenants, you’ll need landlord insurance. This policy will protect you from potential risks such as tenant damage, liability issues, and loss of rental income.

Short-term rentals

If you rent your primary home for just one weekend, your home insurance may not fully cover you. So, it’s best to talk to your carrier about your plans. 

Some homeowners insurance policies may cover one-time rentals, but you might need to add an insurance rider or endorsement, such as a short-term home-sharing endorsement.

If you start renting out your home regularly, homeowners insurance won’t be enough for rental properties. You’ll need specific coverage for short-term rentals. 

That’s where many people become accidental landlords. They rent out their homes a few times a year through home-sharing services. 

For regular rentals, landlord insurance could be a better choice. It helps protect the property structure and household items and provides liability coverage for injuries or damage on your property. 

It can also cover medical costs if someone gets hurt on your property.

Renting a room in your primary residence

Homeowner insurance will likely suffice if you rent a single room in your home. 

This insurance typically covers the primary residence and may extend to a rented room, though it’s important to check the specific details of your policy.

Still have questions?

Want to know more about landlord insurance and homeowners insurance? Here are some frequently asked questions:

What factors should I consider when setting a personal property limit for my landlord and homeowners insurance policies?

When determining your personal property limit, consider the value of your belongings. For homeowners insurance, ensure you have enough coverage to replace personal items in case of theft or damage. 

Landlord insurance only includes personal property that helps maintain the rental property; tenant belongings are not covered.

Do I need to change my homeowners insurance if I rent out my house?

Yes, if you rent out your entire home, you’ll need to switch from a homeowners policy to a landlord insurance policy. 

Homeowners insurance does not cover rental activities, so landlord insurance is essential to protect against risks like property damage or liability.

Does landlord insurance replace home insurance?

Landlord insurance does not replace home insurance, as they serve different purposes. Home insurance is designed for owner-occupied properties, covering the building, contents, and liability for personal use. Landlord insurance, on the other hand, is specifically for rental properties, offering coverage tailored to landlords, such as protection against tenant-related risks, loss of rental income, and liability for tenant injuries.

Can a renter get homeowners insurance?

No, renters can’t get house and landlord insurance. Instead, they should consider renters insurance, which protects their personal property and provides liability coverage. 

What are some ways to reduce the expense of landlord insurance?

To reduce the cost of landlord insurance, you can:

• Increase your deductible to lower monthly premiums.
• Bundle your landlord insurance with other policies for a discount.
• Install safety features such as security systems, which may reduce risk and lead to lower premiums.
• Conduct regular maintenance 

How much renters insurance should a landlord require?

Landlords should encourage tenants to carry renters insurance with enough coverage to protect their belongings and provide liability protection. 

A typical renters insurance offers personal property coverage starting at $30,000 and liability coverage of at least $100,000.

Ready to get started? Learn more about how these insurance policies work and get a homeowners insurance quote.