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What is the Difference Between Renters Insurance, Landlord Insurance, and Vacant Home Insurance?

By on March 6, 2014 in Insurance, Money

What is the Difference Between Renters Insurance, Landlord Insurance, and Vacant Home Insurance?Insuring the place that you live is a pretty important financial life task. You don’t want to have to replace every single thing you own in case the property is destroyed.

Likewise, as a home owner or real estate investor, you want to protect the home from destruction from tenants.

Fortunately there is a wide array of insurance options whether you are the renter or the landlord, but having so many options can also be extremely confusing. What is the difference between renters, landlord, or vacant home insurance?

Different Insurance for Different Needs

The difference between these types of insurance is critical to know. If you have the wrong insurance for your need you could end up losing everything you own or the house you rent out without any insurance to provide coverage. At the end of the day, each policy is designed for a different need.

Renters Insurance

If you are the person renting the apartment, condo, townhouse, or single family residence, this is the insurance you want. Renters insurance covers your belongings in the event of a fire, natural disaster, or theft from the property. If the apartment complex you live in burns down because of your neighbor leaving his iron on, everything you own can be replaced.

This is not an insurance that your landlord buys for you. Their only concern is being able to replace the structure of the building. It is up to the renter to protect his or her belongings.

The best news? Renters insurance is dirt cheap. You can often find policies for less than $20 per month if you bundle them with your auto insurance.

Landlord Insurance or Fire Insurance

As mentioned above, as a landlord you don’t care about replacing your tenant’s belongings. You are worried about the actual structure of the unit you are renting out. You need this type of insurance to even begin considering renting out your home. Without it your tenant could burn the home down and neither you or the renter would have insurance to replace the home structure.

This policy should replace your standard homeowners insurance policy when you decide to rent the property.

Vacant Home Insurance

Vacant home insurance is a type of insurance that is critical when you need it, but often forgotten. If you own a home and have to move or otherwise leave it vacant for a period of time, you need vacant home insurance.

What about my homeowners insurance policy? Doesn’t that cover my home already?”, you might be thinking.

Unfortunately if your home must be vacant for an extended period of time your homeowners insurancy policy will not cover you. Almost every standard homeowners insurance policy has a clause about you occupying the home. They will usually provide coverage for the first 60 days after it is vacant, then you are essentially self-insured unless you purchase a vacant home policy.

A vacant home policy is somewhat similar to a landlord policy in that it doesn’t cover the contents of the home, just the structure. So if you leave your antique dining room table behind when you move and your house burns down for some reason, the coverage will replace your home but not the antique table.

Do Not Go Uninsured

Whichever policy you need, don’t wait to purchase it. It is easy to think, “That won’t happen to me.”, but when it does the results can be financially devastating whether you are the renter having to replace every single belonging or the homeowner needing to pay off the mortgage on the burned down house. The use of a few hundred dollars to cover your property is an essential financial task that should not be ignored.

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