Landlord Insurance vs Homeowners Insurance: Which One is Right for You?

Think homeowner's insurance has your back if you rent out a property? Hmm, not so much.

You're stepping into a whole new ball game with a whole new set of risks.

Let’s explore where homeowners insurance ends and where landlord insurance starts.

What is Landlord Insurance?

Landlord insurance is designed specifically for, yup, you guessed it, property owners who rent out tenant-occupied properties. No huge surprise there. This type of insurance covers risks like property damage, liability claims, and loss of rental income.

The thing is, it’s not just a one-size-fits-all type deal. Uh-uh. Landlord insurance comes in different flavors to suit your needs and risk tolerance:

• DP-1 (Dwelling Fire Form 1) is your no-frills option, covering the very basics like fire, lightning, and smoke damage. It's the economy class of landlord insurance—gets the job done, but don't expect any fancy extras.

• DP-2 (Dwelling Fire Form 2) is a step up, offering more extensive coverage for things like water damage, falling objects, and even freezing pipes. It’s the business class of landlord insurance—a bit more comfy and with a few more perks.

• DP-3 (Dwelling Fire Form 3) covers pretty much everything from protecting other structures on the property, like sheds, rental income loss, and liability coverage against legal claims. It's the first-class of landlord insurance, where you can stretch out, relax, and enjoy the experience knowing your investment is completely protected.

Learn more: what is a self-tour?

What is Homeowner’s Insurance?

Homeowner's insurance is designed to protect owner-occupied properties against worst-case scenarios. It's a safety net against those unexpected “oops” moments that life throws your way, like a rogue storm that dumps a tree through your ceiling.

FYI: Unless added as optional extras, standard policies often won’t cover certain events (known as exclusions), such as floods or earthquakes. If you’d like to see what your policy covers, your Product Disclosure Statement (PDS) is your best friend. It’ll provide all the juicy details on what's covered and what's not.

Key Differences Between Homeowner’s Insurance and Landlord Insurance

We’ve covered the basics. Now, let’s take a look at the key differences between homeowner and landlord insurance so that you, the policyholder, won’t get left in the lurch.

Length of Agreement

You don’t lease your home to yourself, right? We’d hope not. Instead, you pay homeowner’s insurance once a year and get that sweet peace of mind knowing your home is protected.

Landlord insurance is more flexible. It often matches the length of a lease agreement. So, whether you've got a short-term tenant or a long-term lease, you can find coverage that protects your investment for the entirety of a renter’s tenancy.

Occupancy Type

Homeowner’s insurance is for those who actually live in the property they're insuring. It's designed for your primary residence—where you can truly be yourself, blast your favorite tunes, and recharge.

Landlord insurance, on the other hand, is all business. It's specifically for those properties where tenants are residing, whether it's a cozy studio apartment or a sprawling family home.

Liability Coverage

Homeowner's insurance and landlord insurance are pretty similar when it comes to personal liability coverage. Both either have liability insurance baked into the policy or offer it as an extra. It’s designed to protect you from those unexpected moments when someone gets injured on your property.

Specifically, liability coverage helps cover those out-of-pocket legal fees and medical expenses, giving you peace of mind and financial protection.

Contents Coverage

Some, not all, homeowner’s insurance covers your personal belongings—furniture, electronics, clothes, that weird gnome statue you inherited from your aunt... you name it. (FYI: Some policies only offer personal property coverage as an extra).

Landlord insurance is a bit different. It's less about protecting a tenant’s personal property and more about safeguarding the property itself. While it typically doesn't cover your tenant's belongings, it can (depending on the policy) offer protection for those essential items you provide, like appliances.

Structural Coverage

Fire, windstorms, vandalism—you name it, homeowner and landlord insurance covers damage to the physical structure of your home from unexpected disasters. The protection isn’t always limited to the primary structure, though. Some policies will even cover other structures located on the property, like a detached garage or the charming gazebo in the backyard.

Loss of Rent vs Loss of Use Coverage

Homeowner’s insurance offers “loss of use” coverage, which helps cover additional living expenses if you need to relocate while your home is being repaired temporarily.

Landlord insurance includes “loss of rent” coverage, which reimburses you for lost rental income if the property becomes uninhabitable due to a covered peril.

Medical Payments

Both homeowner and landlord insurance typically include medical payment coverage. This protects you against medical expenses if someone gets injured on your property, whether that be a guest at your own home or a tenant (or their visitor) at your rental property.

Learn more: how to avoid rental scams.

Cost of Landlord Insurance vs Homeowners

How do landlord insurance and homeowners insurance stack up in the cost department?

Well, landlord insurance is typically a bit pricier than homeowners insurance coverage. Why? Simple, really: when renting out a property, you invite strangers to live in your prized possession. There's naturally a higher risk involved, and that translates to higher premiums.

A bummer, no doubt. But there is some wiggle room that’ll help you find a policy that fits your budget.

Here are a few things that can influence insurance premiums:

• Location plays a big role in insurance costs. If your property is in a high-risk area (think hurricane zones or areas prone to wildfires), you can expect to pay more.

• The property type also plays a role. So, in most cases, a cozy single-family home will likely cost less to insure than a massive multi-unit building.

• The higher your coverage limits and the lower your deductible, the more you'll pay in premiums. It's a balancing act between protection and affordability.

• Want to add some bells and whistles to your policy, like earthquake coverage or extra liability protection? Additional coverage and added extras will bump up your premiums.

How can you score the best deal on your insurance? Shop around, compare insurance quotes, and don't be afraid to ask your insurance company about discounts or ways to lower your costs. A little bit of research can go a long way in saving you some serious cash.

Do You Need Landlord Insurance or Home Insurance?

Here's the simple truth:

• Living in your property? Homeowner's insurance is your best friend. It's designed to protect your primary residence and your belongings from those unexpected life events.

• Renting out your property? Landlord insurance is your go-to. It's specifically designed to protect you from the unique risks that come with being a landlord.

Things aren’t always so clear-cut, though. Here are a few scenarios to help you decide:

• "I'm renting out my place for a few months while I travel overseas." Landlord insurance is a must-have, even for short-term rentals. It’ll protect your property while you're away and ensure you're covered if any tenant-related issues arise.

• "I'm living in my home, but I rent out a room to a friend." This situation can be a bit tricky. You might need both homeowner and landlord insurance to provide adequate coverage.

• "I'm thinking about turning my basement into a separate apartment and renting it out." Landlord insurance will protect that rental unit and ensure you're covered for any tenant-related issues.

Still unsure? Reach out to a trusted insurance agent or insurance provider. They’ll help you assess your needs and find the perfect policy to protect your investment property.

Protect Your Rental Property and Investment With Ziprent

At Ziprent, we understand the importance of protecting your investment.

That’s why we’ve designed our property management services to simplify the landlord experience, taking care of everything from finding tenants to handling maintenance so you can maximize your returns and enjoy the benefits of stress-free ownership.

Let’s partner up! We'll handle the details while you enjoy the rewards.

👉 Landlords, visit our property management services page to get started.

👉 Tenants, find your new home through our available listings.

FAQs

Do I Need Both Landlord and Homeowner Insurance?

It depends! If you're living in your home and renting out a portion of it, like a basement apartment or a room, you might need both types of coverage. The right landlord insurance policy protects the rented portion, while homeowner's insurance covers your personal space.

What Does Landlord Insurance Cover?

Landlord insurance covers things like damage to the property (from fire, storms, vandalism, etc.), liability if someone gets injured, and even lost rental income if the property becomes uninhabitable.

What Does Homeowner’s Insurance Cover?

The best homeowner’s insurance policies cover damage to your primary residence, your personal belongings, liability if someone gets injured on your property, and additional living expenses if you need to temporarily relocate due to a covered event.

Can Homeowners Insurance Be Used for Rental Properties?

Nope! Homeowner's insurance is specifically designed for owner-occupied homes, not rental properties. If you’re renting out your property, you'll need landlord insurance to protect yourself from the unique risks that come with being a landlord.