Homeowners Insurance vs. Landlord Insurance: What’s the difference?

If you own property in New York, you likely have homeowners insurance to protect your home. But if you’re considering renting out your property, it’s important to know that homeowners insurance won’t offer the protection you need when you become a landlord. 

Homeowners insurance only covers owner-occupied dwellings. Therefore, if you’re renting out your house and a fire occurs, for example, your insurer can deny your homeowners insurance claim. 

In other words, if renters live in your home, you need landlord insurance

Feeling confused? Not to worry. This blog post breaks down everything property owners need to know about the differences between landlord and homeowners insurance so you can make an informed decision.

Landlord insurance vs. homeowners insurance: What is covered?

Homeowners insurance and landlord insurance have a lot in common. Both policies protect your property during a disaster. Both shield you from being held liable for accidents or injuries that occur on your property. And, both provide financial support if your property becomes temporarily uninhabitable. 

However, because homeowners insurance is for owner-occupied properties, landlord insurance is for properties that are rented out, and each policy offers distinct coverage tailored to its intended purpose.

Let’s take a closer look at some key similarities and differences.

Structural Coverage

Like homeowners insurance, landlord insurance covers the physical structure of your rental property, along with any other structures on the property, such as sheds or fences. This means that if your property suffers damage due to a covered peril, such as a fire, lightning, wind, or hail damage, insurance will help cover the cost of repairs.

Unlike homeowners insurance, landlord insurance also includes coverage for accidental damage caused by tenants. So when your tenant tries to install an air conditioning unit and ends up shattering a window panel or accidentally starts a kitchen fire that damages cabinets and countertops, landlord insurance has you covered.

Loss of Use Coverage

Imagine a fire breaks out in your apartment building, causing severe damage that renders your units uninhabitable for months. As a result, you lose all your tenants – and the rental income you rely on. In this situation, with landlord insurance that has a loss of use coverage, you can be compensated for the lost rental income until everything is back in order.

If the same thing happened in your own home, your homeowner’s insurance would cover the cost of temporary shelter and other living expenses while your property is being restored.

Liability Protection

Just like homeowners insurance, landlord insurance protects you from being held liable for injuries that occur on your property. For example, we all know NYC winters can be treacherous. If a tenant’s guest takes a tumble on your property’s front steps and decides to sue, your insurance will step in to cover legal fees and potential payouts.

Landlord insurance also shields you from liability for health concerns and tenant grievances tied to your rental property. For instance, let’s say one of your tenants takes you to court, claiming unsafe living conditions and demanding compensation for health issues. Landlord insurance can cover legal expenses and settlements, sparing you from hefty costs.

While landlord insurance only covers incidents directly related to your rental property, homeowners insurance extends its protective umbrella even further. Most homeowners policies offer liability coverage for you and other household members – regardless of whether the incident occurred in your home or not.

Contents Coverage

Homeowners insurance covers damage to your personal property in the home. For example, if someone breaks into your house and steals some of your personal belongings, your homeowner’s insurance would pay for the cost of replacing those items.

Landlord insurance, on the other hand, excludes personal property – so your tenants need to have their own insurance.

As a landlord, you are not responsible for insuring your tenant’s belongings – that’s where renters insurance becomes valuable. Renters insurance protects your tenants’ belongings and covers temporary living expenses in case of an incident that renders the rental property uninhabitable. A smart move is to require tenants to carry renters’ insurance, which not only benefits your tenants but reduces the likelihood of disputes arising from property damage or loss.

Does landlord insurance replace homeowners insurance?

In short, yes. You’re only eligible for homeowners insurance if you use that property as your primary residence.

Similarly, you are generally only eligible for landlord insurance if you primarily rent the property to other individuals. Because of the distinct eligibility requirements, it wouldn’t make sense to have both policies for the same property.

Is landlord insurance more expensive than homeowners insurance?

Landlord insurance typically costs about 20 percent more than homeowners insurance. The reason is pretty simple: there are unique risks associated with renting out your home, and landlord insurance provides tailored coverage to protect against those risks.

Protecting your property in New York 

From expensive repairs to lawsuits and lost rental income, the risks associated with inadequate coverage for your property are significant. Therefore, it’s essential to assess the unique risk factors of your property and choose the appropriate coverage that aligns with your property ownership goals and risk tolerance.

As specialists in New York City landlord insurance, we’ve worked with NYC property owners for over 100 years and understand the risks you face in and out. If you have questions or concerns about protecting your property, we’re here to help. 

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