Landlord Insurance vs. Homeowners Insurance: What Changes When You Rent Out a Home
A standard homeowners policy is built for owner-occupied homes. Renting out the property usually calls for a landlord or dwelling fire policy, which covers the building, liability, and lost rent differently. Here is how they compare.
If you move out of a home and rent it to tenants, your homeowners policy may no longer fit. Homeowners policies are designed for homes you live in. A rental property typically needs a landlord policy, often written on a dwelling fire form, which covers the building, your liability as a landlord, and lost rental income, but generally not your tenants' belongings.
The short version
- Tell your insurer before renting out a home. Coverage may be limited or denied for a loss if the policy doesn't match how the property is used.
- Landlord policies typically cover the dwelling, other structures, landlord liability, and fair rental value (lost rent) after a covered loss.
- Your tenants' belongings aren't covered by your policy; tenants need renters insurance.
- Short-term rentals often need different coverage from long-term rentals.
- Dwelling fire forms come in versions with narrower or broader covered perils.
How the policies differ
| Homeowners (owner-occupied) | Landlord / dwelling fire (rented out) | |
|---|---|---|
| Who lives there | You | Tenants |
| Building coverage | Yes | Yes |
| Your personal belongings | Broad coverage | Limited to items you keep there for the rental, such as appliances |
| Tenants' belongings | No | No |
| Liability | Personal liability | Landlord liability, related to the property |
| Lost rent after a covered loss | No | Fair rental value coverage |
| Your additional living expenses | Yes | No (you don't live there) |
Dwelling fire form types
Dwelling fire policies are often described as:
- Basic form: covers a short list of named perils, such as fire and lightning, often with actual cash value settlement.
- Broad form: adds more named perils.
- Special form: covers the dwelling against all risks except those excluded, often with replacement cost settlement.
The names and details vary by insurer. Broader forms cost more but cover more.
Lost rent
If a covered loss makes the rental unlivable, fair rental value coverage pays the rent you lose while it's repaired, subject to limits. A hypothetical example:
Show the numbers behind this chart
| Landlord's lost income | |
|---|---|
| Without fair rental value coverage | $12,000 |
| With fair rental value coverage | $0 |
Liability as a landlord
Landlords can be held responsible for injuries caused by unsafe conditions on the property, such as broken stairs or poor lighting. Landlord liability coverage pays defense costs and damages up to the limit. Some landlords add an umbrella policy; check that it covers rental properties, which often must be listed. See liability limits and umbrella insurance.
Requiring renters insurance
Many landlords require tenants to carry renters insurance with liability coverage, sometimes listing the landlord as an interested party so they're notified if it lapses. It protects tenants' belongings and can respond if a tenant damages the property or injures someone. See renters insurance.
Short-term rentals
Renting through short-term rental platforms can fall outside both homeowners and standard landlord policies, because of frequent turnover, business activity, and different risks. Options include short-term rental endorsements or dedicated policies. Platform protection programs exist but aren't a substitute for a policy and have their own terms.
Other things to check
- Vacancy clauses: coverage can be restricted if the property is vacant for an extended period between tenants.
- Ordinance or law coverage for older rentals; see ordinance or law coverage.
- Flood coverage, which a landlord policy generally excludes; see flood insurance.
- Mortgage requirements: lenders may require specific coverage on rental properties.
The takeaway
Renting out a home changes what insurance it needs. A landlord or dwelling fire policy covers the building, landlord liability, and lost rent, while tenants cover their own belongings with renters insurance. Tell your insurer before tenants move in, choose the form that fits the property, and look closely at short-term rental and vacancy rules.
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