A lot of our clients have previously lived in the homes they are renting out, and when you go from being an occupant to a landlord, there are several changes that occur. Insurance is one of those changes. We are joined today by Andrew Cowen with FirstMark Insurance Group to talk about landlord polices versus homeowner’s insurance policies.
Differences and Similarities
A homeowner’s policy covers you when you and your family and belongings are in the house. A landlord policy covers your property when someone else is living there and you are getting rental income. There are many similarities in these two types of policies, but some important differences as well. Make sure you work with your agent to make a change in your policy. You want to get rid of that homeowner’s insurance and purchase a landlord policy.
Loss of Use Coverage
The most important part of a landlord policy is loss of use coverage. No one thinks about that with a homeowner’s policy. When you live in your property, if there’s a fire and you can’t stay in the home for six weeks or six months the loss of use provision will pay you money to go live somewhere else while repairs are being completed. With a landlord policy, it’s a different risk. You have people living there and paying you income every month. If the house burns down, the lease is void and you aren’t getting that rental income anymore. A landlord policy will pay you the rental income until the home is back in working order.
If a tenant causes some intentional damage, it will be covered under your landlord policy. If your renter spray paints the walls and kicks in the drywall and creates problems that are intentional or malicious, those repairs are covered, which is a good thing because those costs add up fast.
Personal property coverage also changes. With a traditional homeowner’s policy, all of your clothes and furniture and electronics are covered. With a landlord’s policy, it’s all the tenants’ belongings that are in the house. You’ll have coverage for your appliances and any tools like lawnmowers. You can add coverage for the things that belong to you.
The cost of a landlord policy versus a homeowner’s policy is pretty similar. It goes on a case by case basis because there are all kinds of variables, including your deductible and policy limits. Sometimes a landlord policy costs a little more and sometimes it costs a little less. Work with your agent to get just the right policy for the price you want.