Property owners who have been renting homes to tenants know the importance of having proper insurance on their investment. People who rent out a home or condo may think that a standard homeowner’s policy is enough to protect their home in the event of a loss or claim. The wrong policy on a property can have negative consequences in the event of a claim.
If the wrong policy on a property is used, there is a good chance that you are spending too much money for the policy. A homeowner’s policy has added coverage that is not found on a landlord policy. The personal belongings coverage is the one that is different. The homeowner will want to protect personal belongings from loss, but a landlord has only minimal interest in the belongings in the home since they belong to the tenants. Since the coverage amounts are less on a landlord policy, they tend to be cheaper than a normal homeowner’s policy.
Another reason to have a correct policy for a rental property is the insurance company can cancel a policy that is not correct for the risk being insured. No one wants to hear that their insurance has been canceled. So it is important to have the correct policy on any property.
One of the most important reasons why a landlord policy is so important for a rental property is that any other policy may not cover any loss on the property. For instance, a motorcycle policy will not cover a car if the car were to be damaged in a hailstorm. You would need an auto policy to fix the damage. The same holds true for homes: You need a homeowner’s policy to fix a home you own and you will need a landlord policy for a home that you rent out.