Choosing to rent your home for a profit can be an exciting decision that can put extra money in your pocket every month. It’s no wonder why more and more homeowners are turning to this method of making money. But, have you explored all the risks involved, and how you can protect yourself throughout the process of renting your home? Selecting home insurance or landlord insurance could be one step to ensure your renting goes as planned, but what are the differences?
The staff here at MyAbsoluteChoice.com have compiled some of the most common differences regarding home insurance and landlord insurance in this article.
What Is The Difference Between Home Insurance And Landlord Insurance?
You might incorrectly assume that homeowner’s insurance will be all you need to cover yourself when looking into renting your home. This is a common misconception that could lead to carrying inadequate coverage for your needs as a landlord. Without the inherent pride of ownership involved with living in your own home, you will require more protection as a landlord, and that is where the differences emerge. Landlord insurance offers more protection for you if something should go wrong.
What Does Home Insurance Cover?
This is the coverage needed to replace the home in a total loss situation such as a fire. You can calculate this coverage by taking the price per square foot it would take to rebuild multiplied by the size of the home.
This coverage is to protect you from selling your assets if there were a judgment against you. If someone sued you for damages, this can protect you from forced liquidation. For home insurance, the costs for this coverage can be much lower than landlord insurance.
This covers the replacement of your personal property. A common way to tell what insurers consider is personal property is to imagine turning your house upside down. An insurer could consider any item that would fall out as personal property.
Loss of Use
This covers the costs associated with renting a new dwelling while they rebuild your home. Most plans come with a maximum of 2 years of coverage.
This can cover detached garages, work sheds or other structures separate from your home on the property.
What Does Landlord Insurance Cover?
This covers replacement of the property in a total loss, but the costs can be cheaper in certain instances due to the lower quality of the fixtures that are sometimes present in rental properties.
This is where landlord insurance coverage is most different from homeowner’s insurance. Tenants can be much more likely to sue you for injuries sustained on the property or even loss of property through no fault of their own. This is the reason landlord insurance can cost much more.
This coverage can be very limited because the landlord will not be living there and will not be at risk of losing personal property.
Loss of Use
Insurers can also call this loss of income coverage for landlord insurance. This can be useful if any damage to the property happens and renders it unavailable for renting; the landlord can continue to pay their mortgage.
This is similar to homeowner’s insurance but can carry a slightly higher risk to the insurer.
Choosing between home insurance and landlord insurance is an important decision. We hope this article has helped inform you about the differences and which may be better for your situation.
Please contact the staff at Absolute Choice Insurance if you have questions about choosing the right coverage for you!