Homeowners Insurance vs. Landlord Insurance: What You Need to Know Before Renting Out Your Home

Renting out your home can generate valuable income, but it also changes your insurance needs. Many homeowners assume thay don’t need landlords insurance and their standard homeowners insurance policy will continue to protect them after they rent the property to tenants. In most cases, that assumption is incorrect.

If you rent out your home without updating your coverage, you risk denied insurance claims, policy cancellation, legal liability, and potential mortgage complications. Understanding the difference between homeowners insurance and landlord insurance is essential before your first tenant moves in.

Do You Need Landlord Insurance When Renting Out Your Home?

In most situations, yes. If you convert your primary residence into a rental property, you typically need to replace your homeowners insurance policy with landlord insurance.

Standard homeowners insurance is designed for owner-occupied properties. Once tenants occupy the home, the insurer considers the property risk profile substantially different. Rental properties carry higher exposure to:

•  Property damage
•  Liability claims
• Maintenance-related losses
• Tenant negligence
• Undetected issues that worsen over time

Because of these increased risks, insurers usually require a landlord insurance policy for rental properties.

Failing to notify your insurer about renting your property could void your coverage entirely.

Landlord Insurance vs. Homeowners Insurance

Although both policies provide protection for the physical structure of the home, there are several important differences between homeowners insurance and landlord insurance.

• Occupancy Requirements
• Homeowners Insurance

Homeowners insurance applies when the property owner lives in the home full-time.

Landlord Insurance

Landlord insurance applies when tenants occupy the property, either through long-term leases or recurring short-term rentals.

If you rent out your property while no longer living there, landlord insurance is generally required.

• Personal Property Coverage
• Homeowners Insurance

A standard homeowners policy covers your personal belongings, including:

• Furniture
• Electronics
• Clothing
• Appliances
• Collectibles

Landlord Insurance

Landlord insurance typically covers only property used to maintain or service the rental property, such as:

• Lawn equipment
• Maintenance tools
• Appliances provided for tenant use

Your tenant’s belongings are not covered under your landlord policy. Tenants should carry renters insurance to protect their own possessions and living expenses. We encourage all landlords to require renters insurance from all their tenants. 

Liability Protection

Homeowners Insurance

Homeowners liability coverage protects you if someone is injured on your property due to your negligence.

Landlord Insurance

Landlord insurance also includes liability protection, but it is specifically tailored to rental property risks. For example, it may help cover legal or medical costs if:

• A tenant slips on unsafe stairs
• A guest is injured due to poor maintenance
• A railing collapses because repairs were neglected

Liability exposure is one of the primary reasons landlord insurance is more expensive than homeowners insurance.

Loss of Use vs. Fair Rental Value Coverage

Loss of Use Coverage

Homeowners insurance includes loss of use coverage, which pays temporary living expenses if your home becomes uninhabitable after a covered event like a fire.

Fair Rental Value Coverage

Landlord insurance replaces this feature with fair rental value coverage, also called rental income protection.

If your rental property becomes uninhabitable because of a covered loss, fair rental value coverage helps reimburse lost rental income while repairs are completed.

Cost Differences

Landlord insurance generally costs about 25% more than homeowners insurance because rental properties present higher insurance risks.

Factors that influence landlord insurance premiums include:

• Property location
• Age of the home
• Number of units
• Claims history
• Type of tenants
• Short-term vs. long-term rental activity

Can I Keep Homeowners Insurance While Renting Out Your House?

There are limited situations where you may not need a full landlord insurance policy.

Renting Out a Single Room

If you still live in the home and rent out:

• A basement apartment
• A bedroom
• An attic
• A garage apartment

Your insurer may allow you to keep your homeowners policy with an added endorsement or hybrid coverage option.

Always confirm this directly with your insurance company.

One-Time Short-Term Rentals

If you temporarily rent your home during:

• A major sporting event
• A festival
• A concert weekend

Your insurer may not require a policy change for a one-time rental situation. However, it is still important to notify your carrier.

Temporary Absences or House Sitting

If a friend, relative, pet sitter, or house sitter stays in your home while you travel temporarily, your homeowners policy may still apply because the property remains your primary residence.

Longer absences may require additional coverage or vacancy endorsements.

Do You Need Landlord Insurance for Airbnb or Short-Term Rentals?

Yes, in many cases.

Most homeowners insurance policies exclude business activity and recurring short-term rentals. If you regularly rent your home through platforms like:

• Airbnb
• Vrbo
• Booking.com

you may need:

• Short-term rental insurance
• Home-sharing insurance
• A landlord policy designed for vacation rentals

This is especially important if:

• You rent your home seasonally
• You travel frequently and lease the property while away
• You regularly host paying guests