Do You Need Homeowners and Landlord Insurance for a Rental?

Updated: October 3, 2024

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Depending on how a rental property is used, you may need both landlord and homeowners insurance. Each type of insurance serves distinct purposes: landlord insurance for rental activities and homeowners insurance for personal residence coverage.

If you use your rental property periodically throughout the year, such as for vacation, it may be best to get homeowners insurance to protect your liabilities. Understanding when you need each type of policy can help you determine what you need for financial protection.

Key Takeaways

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Landlord insurance is designed for rental properties, while home insurance protects those who use the property as their primary residence.

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It's not strictly necessary to purchase home and landlord insurance for a rental property, but depending on your usage, it may be wise.

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Purchasing home insurance for a rental property is advisable if you use the home for personal use throughout the year.

Differences Between Landlord and Homeowners Insurance

Landlord insurance and homeowners insurance cater to different needs: the former is designed for rental properties, while the latter covers primary residences. Understanding the specific protections each type of insurance offers is helpful for property owners, whether they are renting out their property or living in it.

Here are the key differences between the two:

Feature
Homeowners Insurance
Landlord Insurance

Primary Use

Covers primary residences where the owner lives.

Covers rental properties not occupied by the owner.

Property Coverage

Covers the entire home structure, including garages, sheds, etc.

Typically has more limited structural coverage, focusing on the main dwelling.

Personal Property

Covers personal belongings such as furniture, electronics and clothing.

Covers only property used to service the rental, like appliances or furniture provided to tenants.

Liability Coverage

Provides liability coverage for accidents occurring within the home or on the property.

Provides liability coverage specifically related to renting out the property, such as tenant injuries.

Loss of Use

Covers additional living expenses if the home is uninhabitable after a covered event.

Covers loss of rental income if the property is uninhabitable after a covered event.

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When choosing between landlord and homeowners insurance, consider how frequently the property is rented out. If you only occasionally rent out a room or your entire home, your homeowners policy might offer sufficient coverage, particularly if it includes a "short-term rental" clause. Make sure to ask your insurer if it offers this before committing to be sure.

When to Get Landlord Insurance for a Rental

You should consider getting landlord insurance when you rent out a property you do not live in, especially if it is a long-term arrangement, such as a yearly lease. With landlord insurance, you can protect your investment from risks specific to rental properties, such as tenant-caused damage and loss of rental income due to property unavailability.

Here are some common scenarios where you should consider landlord insurance:

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    Renting Out a Full Property

    This may apply if you own a property you do not live in and rent it out to tenants.

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    Partial Property Rentals

    This may be relevant for owners who live on the premises but rent out parts of the property, such as a basement suite or a separate unit.

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    Short-Term Rentals

    This applies to short-term rental situations, like vacation homes, if rented frequently.

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    Multiple Properties

    When managing several rental units or properties, it’s important to ensure proper coverage of each property under a landlord policy.

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    Transition From Personal Use

    If you’re transitioning a property from your primary residence to a rental property, this may apply.

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    Legal and Financial Protection

    This may apply if you want coverage for potential legal fees and lost rental income in case of tenant disputes or damage not covered by standard insurance.

When to Get Homeowners Insurance for a Rental

Homeowners insurance is essential when you are using your property both as a residence and a rental. It provides the necessary coverage for parts of your property that you might rent while living there, such as a guest house or a room. Homeowners insurance also covers your personal belongings and offers liability protection for accidents that could occur on the premises.

Below are specific instances when homeowners insurance is appropriate for a rental property:

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    Owner-Occupied Rental

    If you live in the property and rent out a portion of it, such as a room or a basement apartment, you likely want homeowners insurance.

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    Vacation Home Rentals

    This may apply to properties used occasionally by the owner but are rented out as vacation homes for parts of the year.

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    Transition to Rental Use

    If you plan to start renting your property, ensure it's covered during the transition period before converting to full landlord insurance.

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    Short-Term Rental Use

    This may be relevant if the property is rented out infrequently or for short durations, and the primary use remains as your personal residence.

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    Personal Property Protection

    If you want to protect personal belongings or furnishings that remain in a property used by tenants, you'll likely benefit from home insurance.

Deciding if you need both landlord and homeowners insurance depends on how you use your property. Whether you’re living in your home, renting it out or doing a bit of both, choosing the right insurance policy will help you protect your investment and personal assets.

About Mark Fitzpatrick

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Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.

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