Not having the right insurance policy is like having an umbrella with holes in it on a rainy day: You still get wet. Each insurance policy defines the damages it covers. Each policy cites what it includes, what it doesn't include, exceptions to the policy and optional endorsements. As a landlord and a homeowner, it's important to have the right insurance policy for your personal and business needs.
Homeowners Insurance
Homeowners insurance protects you against damage to your home or losses associated with your home. It is intended for the use of owner-occupied homes. Unless it includes a caveat that covers renters, or you only take in a renter up to four weeks during the year, most homeowners insurance policies don't cover tenants. Submitting a claim for a tenant-damaged home against your homeowners insurance could result in denial of coverage or cancellation of your policy.
Landlord Insurance
Accidental landlords might not understand the finer details of having the right insurance policy. But if you find yourself a landlord because you couldn't sell your home after buying a new one, having the right policy means you'll have the right coverage. If you still live in your home but only rent out a room, you might be able to add an endorsement to your homeowners policy. When you don't live in the home, you'll need landlord insurance, a completely separate policy.
Renters Insurance
When a person rents a home or apartment from a landlord, rental insurance protects the renter from theft or damage to personal property, and it provides protection to the landlord for any damages caused to the property. This policy protects you and the landlord from damages that might be caused because of theft or a malfunctioning appliance, such as a hot water heater that springs a leak. Most landlord insurance policies won't protect your personal belongings when you are a renter.
Optional Coverages
Read your insurance policy so you understand exactly what it covers. For example, if you live in California, most homeowners insurance policies don't cover damage from earthquakes; you'll need to add an endorsement or an option to your policy for that coverage. If you live in a flood zone, you might need to obtain flood insurance for damage due to floods. Read your policy carefully so you know what you need to add if you live in an area that is prone to earthquakes, floods or tornadoes.
