The status of the insured is the primary distinction between landlord’s risk coverage (also known as residence fire insurance) and standard homeowner’s coverage. Home insurance, as the name implies, is designed for home-owning residents. On the other side, landlords are the intended beneficiaries of rental property insurance. There are several distinctions between the two, despite the similarities in coverage.

Coverage Variations

In most circumstances, the lender requires basic homeowners insurance to get a mortgage, and it also provides enough protection for a single-family home. Landlords are not obligated to get rental property insurance and may opt for a standard homeowner’s policy. For instance, if the landlord’s property is destroyed, he will not be compensated for his lost revenue by a conventional homeowner’s insurance policy. Landlords may save money in the short term by forgoing renter’s insurance in favor of a homeowners policy. Still, they risk suffering catastrophic financial losses in the event of a property loss.

Rent Income Loss

Getting a rental property insurance policy is essential since homeowners’ policies do not cover loss of rental revenue. When a tenant is evicted due to a covered loss (such as a fire), the landlord loses out on rent revenue while the building is being restored. If the landlord is insured, the insurance company will pay for any damage done to the property. But, if the landlord has rental insurance, the insurance company will compensate him for lost rent until the house is once more livable.

Allowed Damages

Any permanent buildings on the site will be protected against vandalism, theft, hail, wind, and fire, thanks to both kinds of insurance policies. The insurance policy on the rental property will preserve the laundry room fixtures and appliances.

Yet, most homeowners’ policies exclude damage to the structure and only cover contents. Hence, if the insured property becomes uninhabitable due to a covered risk, the insurance company will pay for the policyholder’s additional living expenses. In contrast, the insured property is being repaired or rebuilt.

Moreover, it is essential to note that both plans provide liability insurance if a visitor is injured while on the premises. This protects the landlord or homeowner by paying for the injured party’s necessary medical care and providing legal representation.

Limitations

Insurance coverage for both homeowners and tenants has restrictions. None offers protection against natural disasters like earthquakes, floods, or even mechanical failures. You must pay extra for a specialized endorsement to be compensated for a backed-up sewage system. Insurance maximums are likewise capped. The average value of jewelry stolen each year is about $2,000. But, standard upkeep, repairs, and tenant possessions are not covered by a standard landlord insurance policy.

Remember that this is only a summary and that each policy is unique. Review your insurance policies and discuss any necessary changes with your independent insurance agent.