If you own a rental home, it is your responsibility to insure the structure of the home. Many people refer to this type of insurance as landlord insurance or rental home insurance. A landlord policy is different from other traditional homeowner’s policies in many ways, and it offers defined, specific coverage on the home.
There has often been confusion between landlords and renters over whose insurance covers what. In many cases, catastrophic losses have occurred because policy owners did not understand what their policies covered. In basic terms, a landlord policy generally covers the dwelling, not the contents inside. A landlord would purchase insurance to cover his investment, the rental house.
Renter’s insurance covers the contents in the rental house. Those who are renting the home would purchase this type of insurance to cover items such as their furniture, TVs and other personal belongings.
Landlord policies will pay the owner of the rental home for many types of losses to the home, such as fire, vandalism and wind damage. The policy will only pay to the coverage amount and terms specified on the policy. If the renter’s contents are damaged from any of these losses, the landlord policy will not pay for any of the contents.
In order to purchase a landlord policy, you do have to have a renter, or potential renter, in the home. If the home becomes vacant for an extended period of time, the insurance company may require you to switch the type of insurance policy from a landlord’s policy to a vacant homeowner’s policy until a new renter is found.
Landlord insurance is a tremendous benefit to the rental home owner because it protects the value of the home in case of loss. If there is a mortgage on the rental home, the mortgagee may require that a rental policy be placed on the home to protect their investment.