What is The Purpose of Renter’s Insurance? How Does it Differ From Landlord Insurance?

What is The Difference Between Renter’s Insurance and Condo Insurance?
August 12, 2014
Can I Use My Life Insurance While I’m Still Living?
August 26, 2014
Show all

What is The Purpose of Renter’s Insurance? How Does it Differ From Landlord Insurance?

What is the purpose of renter’s insurance? How does it differ from landlord insurance?

As a renter or landlord, it’s important to know what type of insurance you need to protect your property. As a renter, you need to protect your belongings.  These are the things you could pick up and take with you. As a landlord and/or homeowner, you need to protect your actual building and property.

The Purpose of Renter’s Insurance

If you are renting a property – a house, condo, or apartment – the HO-4 renter’s insurance policy is designed to cover your needs. This policy will include:

  • Personal property coverage for your belongings – at an amount determined by you and your insurance agent
  • Loss of use coverage to pay for some or all of the cost of relocation if there is a loss and your rental property is not inhabitable for a period of time
  • Medical payments coverage to serve as a “good faith” payment system if someone gets hurt on your property
  • Liability coverage to coverage your legal defense and any possible judgment against you if you cause someone an injury or damage their property.

A lot of people think they can get away without buying renter’s insurance but it’s really not worth the risk of losing everything you own if your dwelling is destroyed, or in a lawsuit,  especially since renter’s insurance is typically very inexpensive and can qualify you for a discount on car insurance.

The Purpose of Landlord Insurance

As a landlord who owns a property, you’re going to buy a dwelling policy (HO-2). A dwelling policy is designed specifically for instances where a person owns a home but does not personally live in it. Dwelling policies include coverage for:

  • Building coverage for the structure itself
  • Additional coverage for other structures on your property (detached sheds or garages)
  • Medical payments coverage
  • Liability coverage

If you are acting as a landlord, you may either need to add an endorsement to your homeowner’s insurance policy or purchase a similar yet separate landlord insurance policy. Doing so would give you additional coverage for loss of use if you are unable to collect rent due to a loss.

Talk to your insurance professional about your needs when you buy your investment property, or if you own a property you later decide you’re going to rent to someone else.  This is especially important if you were living in the house and decide to move out and rent it. Failure to let your insurance company know about major changes in property ownership and use could cause trouble in the event of a loss.

Comments are closed.