Contrary to popular opinion, insurance is not a luxury; it’s a necessity. It offers policyholders a safety net against several liabilities such as theft, fire, or damage from the elements. According to industry statistics, the insurance sector is worth $1.2 trillion, with millions of users eager for more peace of mind.
Although insurance is essential, many landlords get confused when choosing the right plan. Do you get a general policy or try business liability insurance for more specific coverage? What’s the best option between homeowners and landlord insurance? If the last question echoes your thoughts, you’re at the right place. By the end of this article, we’ll break down these policies and the benefits of having both homeowners and landlord insurance.
What is Homeowners Insurance vs. Landlord Insurance
The inside and exterior of your rental property are normally covered by a homeowner’s insurance policy. It aids in repairing the harm caused by a covered loss, including fire, flood, or theft. When the damage is severe, some plans might include rebuilding initiatives or total loss compensation. Although most home-related accidents, including fire, are often covered by homeowners insurance, it is still a good idea to keep your house secure and not put it in danger simply because it is covered. And to do that, you may contact experts from a fire protection company that can outfit your home with fire safety equipment (like Intumescent Coatings on the walls).
One of the major differences between homeowners and landlord insurance is the extent of their coverage. While homeowners insurance is often limited to personal property, landlord coverage can extend to tools and services for rental maintenance.
The landlord insurance is more specific to people who own rentals. Thus, it caters to landlord-specific issues like unpaid rent and tenant damage. Professional Property Management of Northern Virginia suggests getting landlord insurance for additional protection on your rental investment.
What Do These Policies Cover?
Homeowners and landlord insurance policies cover similar events. Some of the policies they both covers include:
Property damage due to natural disasters like earthquakes, hurricanes, or tsunamis.
Electrical or gas malfunction
Rental expenses while your property is rebuilt
As we highlighted earlier, landlord insurance is more specific to landlord problems and thus can be more extensive. In addition to the policies we’ve listed, landlord insurance also includes:
Lost Rental Income
Surplus Construction Expenses
Since landlord insurance is more particular to rental agreements, many property owners prefer to opt for this service for their rental units. At the same time, they can buy a homeowner policy.
You should note that policies vary by provider; yours might not include all the ones we’ve listed. Hence, it’s crucial to research your options for homeowners insurance policy and choose carefully.
Key Benefits for Landlords
Protection Against Damages
No matter how careful you are, the damage is inevitable. Wear and tear, weather, and accidents happen, leaving your home in poor condition. However, some of these events can spring up on you, making it hard to secure the funds to resolve a pertinent issue. If there is fire damage, for instance, then you would need funds to employ a fire restoration service in dearborn heights or someplace relevant to you. Thus, having a solid backup is a proactive way to cover such emergencies is essential. Besides, considering the monthly premiums can easily fit within your budget, the right insurance is undoubtedly worth having.
Assistance with Legal Expenses
Many landlords overlook legal expenses when planning their next year or quarter budget. However, this practice is a dangerous habit, as ignoring the necessary legalities can cost you more in the long run. For example, if a tenant decides to take you to court for an injury sustained on your premises, it could be an expensive payout.
Extra Cushion Against Theft and Vandalism
If the crime rate in your neighborhood is on the high side, you might experience issues with burglars. Although sometimes, landlords might find that the theft is an inside job, like in the case of a bad tenant or visitor. Either way, an insurance policy offers you coverage against theft and vandalism. The latter is especially beneficial if you currently have vacancies. Vacant apartments are more likely to get vandalized because no one on the property can stop them. However, with a good policy, you can receive reimbursement to fix any damage.
Protection from Difficult Tenants
Dealing with tenants is often one of the most challenging parts of being a landlord. If you’re not thorough with your tenant screening, you might wind up with low-quality renters that give you a hard time. One of the ways tenants can be difficult is by missing their rental payments. As a result, you might struggle to meet your mortgage, pay for utilities, or settle your bills. While that can be annoying, having landlord insurance can curb the worst of it.
Every investor understands how crucial it is to protect their rental properties from harm. However, that isn’t always possible, and it would be best to have a backup plan. Thus, if you want to keep your business running smoothly when facing obstacles, you should opt for adequate coverage. This article highlighted the benefits of having homeowners and landlord insurance. Both policies protect against damages, assistance with legal expenses, and a cushion against theft. Landlord insurance policyholders also have the added benefit of coverage for unpaid rent, tenant damage, and personal liability.