When an owner decides to begin renting out their home, there are important steps to take to protect the properties.
Without the right coverage, landlords could find themselves paying damage repairs out of their own pockets.
It is important landlords understand the differences between landlord insurance and homeowner’s insurance so they can make the right choice in coverage.
The Length of the Rental Contract
When deciding between homeowner’s insurance or landlord insurance, the length of the rental agreement is an important consideration.
If there is a lengthy agreement, individuals will need to seek insurance coverage for landlords. If the rental is temporary, an owner’s homeowner’s insurance policy may offer adequate coverage.
It is wise for homeowners to work with an insurance agent who can sit down with them and go over their needs. These agents can review the rental contract and the owner’s current insurance policy to see if changes need to be made.
Homeowner’s Insurance Vs. Landlord Insurance
There are key differences between the two types of insurance coverage, and property owners need to be aware of these differences so they can make the right decisions on purchasing and maintaining coverage for their property.
The following offers insight into some of the differences between the two.
It is important property owners understand how each type of insurance policy covers their personal belongings. A homeowner’s insurance policy covers all of the belongings of a homeowner.
Landlord insurance typically only covers the property that is used to service the tenant. If a property owner only has landlord insurance, they should remove any personal belongings from the property.
Another key difference between the two types of insurance coverage is liability coverage. When a tenant is hurt on the rented property, the landlord’s insurance will likely cover all or most of the damages that result, including the tenant’s medical bills.
Homeowner’s insurance typically only covers family members and those who live in the home.
What to Look for in Landlord Insurance Coverage?
When a property owner is planning on renting out a home, they need to protect themselves with landlord insurance. The following offers helpful information on choosing the right coverage.
- Customization is highly important for a landlord policy. A landlord policy should be tailored to meet the needs of the individual.
- If a landlord lives in an area that is prone to flooding, they should make sure their policy covers it in all forms.
- It is also important the landlord insurance offers guaranteed replacement cost and not just cash value.
- Prices can rise for repair services. A landlord insurance policy should automatically adjust its coverage according to inflation.
Tenants Need Renter’s Insurance
Many renters do not realize they need renter’s insurance. They often mistakenly believe their belongings are covered under the landlord’s policy, but that is not the case. The personal belongings of a renter can only be covered under a renter’s insurance policy.
Renter’s insurance will cover a renter’s possessions and can even offer some degree of liability coverage. Renters, just like landlords, need to be mindful of their insurance coverage to ensure they are properly protected.
Homeowners and landlord insurance are not the same. They are both beneficial, depending on the circumstances of an owner.
It is wise for homeowners, landlords, and tenants to meet with an insurance agent to go over their coverage needs. Getting professional help will ensure the right coverage is sought.