Landlord Insurance vs. Homeowner’s Insurance: Don’t Mix Up Your Keys When Renting Out Your Home!
So, you’re ready to unlock the potential of your property by renting it out? Fantastic! But before you hand over the keys. Don’t forget your insurance, and let’s talk. Choosing the wrong type can leave you with a financial hangover worse than any post-party mess. Find out the key difference between landlord insurance and homeowner’s insurance.
Think of it like this: Homeowner’s insurance is like a trusty companion, protecting your main residence when you’re living there. Landlord insurance, on the other hand, is a specialized bodyguard for your rental property. Let’s break down the key differences:
- Homeowner’s insurance: You, your family, and anyone permanently living in the property.
- Landlord insurance: The property itself, any included appliances or fixtures, and your liability as the owner. Tenants’ belongings are not covered under your policy (they need their own renters insurance!).
- Homeowner’s insurance: Typically covers damage from storms, fire, theft, and other perils listed in your policy. May also include personal property coverage for your belongings.
- Landlord insurance: Similar to homeowner’s insurance in terms of perils covered, but also includes:
- Loss of rent: If your property becomes uninhabitable due to covered damage, you’ll be reimbursed for lost rental income until repairs are completed.
- Liability coverage for tenant-related incidents: Covers you if someone gets injured on the property or suffers property damage due to your negligence.
- Vandalism and wear and tear: Some policies offer additional coverage for intentional damage or normal wear and tear caused by tenants.
- Homeowner’s insurance: Generally cheaper than landlord insurance, as the risk is considered lower with owner-occupants.
- Landlord insurance: Typically, more expensive due to the increased risks associated with rentals. Expect to pay around 25% more than a standard homeowner’s policy.
Choosing the right key:
Remember, using homeowner’s insurance for a rental property is a big no-no. If you decide to rent out your home, notify your insurer immediately and switch to landlord insurance. Failing to do so can result in the cancellation or rescindment of your policy, leaving you financially vulnerable.
So, when considering renting out your home, remember: it’s not just about finding the ideal tenant, it’s about finding the right insurance. Choosing the right policy protects your investment, provides peace of mind, and ensures you can weather any stormy financial clouds that may come your way.
Got any questions about navigating the maze of insurance options? Contact your local agent today.