Homeowner’s insurance and landlord insurance is basically the same thing, right?
We hear this question or a question similar to this quite often.
Now while I understand why you might think that they are similar enough that it should work, that is not how the insurance contract is written causing a potential coverage gap in the event of a claim.
A standard homeowner’s insurance policy covers losses or damage to an individual’s house and assets in the home. Homeowner’s insurance is split up between both property and liability coverage.
Homeowner’s insurance is meant for primary or secondary dwellings that are owner-occupied.
Landlord insurance is meant for properties that are occupied by non-deeded owners. These can be paying tenants or even family members.
A landlord insurance policy is what you should have when you are using a property as an investment property.
What is the difference between the policies
There are a few differences between these two policies that could cause coverage gaps if you do not have the correct coverage.
- A homeowner’s policy covers your personal contents in the household automatically up to a certain percentage. A landlord policy does not, you would have to add contents coverage separately.
- A landlord policy has coverage for loss of rents. Rental income that is lost because of a covered property claim, a homeowner’s policy does not.
- A homeowner’s policy covers personal liability and a landlord policy usually has premises liability.
When should you switch your property to a landlord’s policy?
If you carry a homeowner’s policy on a property that you do not live in and are currently renting out and have a claim, it could be a big issue. Since this is not owner-occupied, the insurance company can potentially deny the claim leaving you without any coverage.
The moment that you no longer use the property as a residence for yourself and you start renting it or allowing someone else to use it, then it is time to switch the coverage from a homeowner to a landlord.
This will give you the necessary coverage in the event something happens.
Make sure you reach out to your insurance agent the moment you move out so they can put the proper coverage in place.
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