When deciding to rent out a property or apartment building that you own, you’ll be faced with a choice on whether or not to purchase landlord insurance for that property. This is not a “required” cost like a
homeowners policy would be if you were getting a loan to pay for the home.
You may also think that you don’t NEED to purchase landlord insurance because you already have homeowners insurance.
Let us fill you in on a big secret: Comparing homeowners insurance to landlord insurance is like comparing apples to oranges. Are both fruits? Yes. Are they completely different? Absolutely.
So let’s talk about why you need both homeowners insurance and landlord insurance and why it is absolutely necessary when renting out a property or apartment building.
Why Homeowners Insurance Doesn’t Protect Your Rental Property
Homeowners insurance covers the home you consider your main dwelling. When you purchased your home, you most likely got a loan to help pay for it. When you do this, you’ll most likely be required to pay for a homeowners insurance policy that protects your property, personal assets, and family in case of any incidents that may occur.
The home you reside in (and specify that you live with your insurance agent) is the home that is covered under this policy. This also includes the yard and any extra structural buildings on the land (garage, shed, etc.)
Any other properties that you own and do not reside in will not be covered by this policy.
That is why you need both homeowners insurance and landlord insurance.
When you choose to rent out a property, you’ll want to get landlord insurance. Again, homeowners insurance WILL NOT cover your rental property.
You may ask yourself, “Why is landlord insurance necessary when I’m making my tenants get renters insurance?”
The answer is simple: Renters insurance covers your tenants’ property, and landlord insurance covers yours!
Landlord insurance protects you when the property that you rent out is damaged, or someone is injured.
When you purchase a landlord insurance policy, you typically get coverage for the following:
- Property damage – Takes care of structural damages due to weather*, fire, water damage, or tenant abuse/negligence.
*Not all types of weather damage are included in your policy- talk to your agent about additional flood and earthquake coverage.
- Asset damage – Helps to repair or replace appliances, electronics, furniture, artwork, or anything else that you personally own and have placed in the rental property.
- Liability coverage – If someone is injured on your rental property and it is deemed your fault, you’ll have help with legal and medical fees that are incurred.
- Loss-of-income – During the time you need to repair your property and you cannot rent it out, you can receive loss-of-income payments to help with your costs of living.
There are also multiple other additions you can add to your policy to ensure you are covered to the fullest.
The reasons above are why you need both homeowners insurance and landlord insurance. You do not want to be stuck paying out of pocket for things that would be covered through an insurance policy.
Yes, You Need Both Homeowners Insurance And Landlord Insurance Don’t Have Landlord Insurance? See Insurance By Castle Today!
As the leading landlord and apartment building owner insurance agency in California, our team of experienced agents can assist you with all your insurance-based needs.
To learn more about landlord insurance, read our latest article, “How Do You Calculate Insurance On A Rental Property,” for more information!
If you’re ready to rent your property or apartment, call us today to get a quote for quality landlord insurance within your budget!