Sometimes, first-time landlords assume their standard homeowners’ insurance will still be suitable once they start renting out their home — but this isn’t necessarily the case.

Homeowners insurance is intended to cover owner-occupied homes, aka homes that are lived in by their owners. That means when you’re renting out your home to someone else, this coverage may no longer be suitable.

Whether you need a landlord policy or homeowners insurance policy typically depends on whether you will be living there, and how often you plan on renting out your place. For instance, if you’re only renting out a room within your home but you’re still living there, or if you’re only renting out your place occasionally — a homeowner’s policy might be enough; however, if you intend to rent it out regularly, you likely need a landlord policy.

• Dwelling Coverage: Landlord insurance will cover you for the cost to repair or rebuild your home. This covers damage to your home plus any structures such as sheds and garages.
• Property Damage: This coverage will protect you in the event of damage to your personal property due to things like fire, burst pipes, or burglary.
• Loss of Use (or loss of rental income): Let’s say your rental property becomes completely unlivable after a fire and you can no longer rent it out while the place is being repaired. This coverage will offer you temporary rental reimbursement to cover the financial loss you’ll miss out on while your property is being repaired/rebuilt.
• Liability protection: This part of your landlord policy will protect you against liability claims and potential lawsuits you may be responsible for as the owner of the home. If a guest or a tenant is injured on your rental property because of something you’re legally responsible for, this coverage will help cover the costs for bodily injury claims, including medical costs or legal fees.
  • Your liability protection will also cover you if you’re found responsible for another person’s property damage. For instance, if your leaking pipe causes damage to your neighbor’s property, this may be covered under your landlord policy.