Answers for Arizona investors
What's the difference between a landlord policy and a homeowners policy?
A homeowners policy insures a home you live in, including your belongings and your personal liability. A landlord policy, also called a dwelling fire policy, insures a home you rent to someone else: the building, your liability as the owner, and often the rent you lose after a covered loss. If you move out and rent the home, the policy usually needs to change.
Side by side
| What it covers | Homeowners policy | Landlord policy |
|---|---|---|
| Who lives there | You, the owner | Your tenant |
| The building | Covered | Covered |
| Your belongings | Covered, for the things you own in the home | Limited, often to items you provide for the rental, such as appliances |
| Your tenant's belongings | Not part of the policy | Not covered; that's the tenant's renters policy |
| Lost rent | Not included | Often included, as loss of rents or fair rental value |
| Liability | Personal liability for you and your household | Liability for you as the owner of the rental |
| Common forms | HO-3, or HO-6 for a condo | DP-1, DP-2, or DP-3 |
Why the difference matters
Carriers price and write a home differently depending on who lives there. A rental has its own risks: a tenant you don't supervise, turnover between leases, and the chance the home sits empty. A homeowners policy expects the owner to be there, and many limit coverage when the home is rented or used as a business.
If a claim happens on a rental that's insured with a homeowners policy, the carrier may question it or limit what it pays, depending on the policy. Telling your agent when a home becomes a rental is the simplest way to avoid that.
When to switch
- You move out of a home and keep it as a rental.
- You buy a home to rent out.
- A rental becomes your primary home, which works the other way.
- You start renting the home to short term guests, which may call for a short term rental policy instead.
Time the new policy to start before the tenant moves in, so there's no day without the right coverage. The free Portfolio Ledger flags any rental that's still insured on a homeowners policy.
Quotes and coverage are subject to underwriting and carrier approval. Everhold Insurance is a licensed insurance agency in the State of Arizona. License # 3004512575.
Questions investors ask
Straight answers.
Can I keep my homeowners policy if I rent out my home?
Usually not for long. Homeowners policies are generally written for an owner who lives in the home, so renting it out usually calls for a landlord policy. Ask your agent before the lease starts.
Does a landlord policy cover my tenant's belongings?
No. A landlord policy covers your building and your liability as the owner, and your tenant's belongings are covered by their own renters policy. Many landlords require renters insurance in the lease.
Is a landlord policy the same as a dwelling fire policy?
In most cases, yes. Landlord insurance is often written on a dwelling fire form, such as a DP-1, DP-2, or DP-3, and the three forms differ in what they cover.
What if I rent out a room in the home I live in?
That's a different situation. Renting part of a home you live in may be handled on your homeowners policy with an endorsement, depending on the carrier, so tell your agent before you rent.
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