If you own a residence that you are renting out, you need to make sure you have the right kind of insurance before allowing them to move in. Landlord and homeowner's insurance may seem similar, but there are some clear differences you need to be aware of.
One of the biggest differences you will find between landlord and homeowner's insurance is that the homeowner's policy is typically for an owner-occupied residence. If the resident of the home is not the owner, but they are insured on a homeowner's insurance policy, then there may be an issue with coverage that arises if a claim is filed.
A landlord's policy, also known as a dwelling fire policy, a business owner's policy, or commercial package policy, all typically allow tenant-occupied residency. The difference between the policies comes in because an owner is more likely to address a potential claim issue than a renter, resulting in fewer claims overall.
For this reason, landlord insurance may be more expensive than a homeowner's insurance policy because there is more of a risk for the insurance company offering the policy.
An Overview of Homeowner's Insurance
To understand the differences, even more, we need to go over the basics of these policies. Remember, the coverage offered under each policy varies depending on a number of factors, including the carrier and endorsements.
- Dwelling Coverage: This coverage protects the structure of the home, including any permanent fixtures there are.
- Liability Coverage: This coverage protects covered bodily injury and property damage caused by the insured on the policy.
- Personal Property Coverage: This coverage is for the personal belongings of the family members while they are a member of the household.
An Overview of Landlord's Insurance
The same three coverages can also be applied to landlord's insurance; however, there are a few differences in what those allowable coverages are.
- Dwelling Coverage: this is about the same as it is under a homeowner's insurance policy. It protects the home and any permanent structures.
- Liability Coverage: Under a landlord policy, it protects the property owner against any liability claims resulting from the rental. Under a homeowner's insurance policy, the coverage would not apply to bodily injury or property damage because it was the tenants and not the owners.
- Personal Property: minimal personal property coverage is included under a landlord's insurance policy. The tenants are responsible for ensuring their own property in the rental in the form of renter's insurance. However, if the landlord has personal property in the rented home, such as a major appliance, this coverage can be added separately.
If you have a rental property and want to ensure you purchase the right coverage, contact the Panorama professionals today to discuss your options. They will get the details regarding your specific situation and make sure you find affordable rates with the right insurance company.
Remember, it is easy to secure the wrong coverage. Don't wait until something happens to find out that you don't have the necessary coverage. Discuss your options today.