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Homeowners' insurance

If you are looking to protect your family home, you can use a homeowners' insurance policy, which typically covers damage from hazards such as fire, lightning, wind and hail. Homeowners’ policies also contain liability coverage for personal injuries. Many mortgage lenders require home loan borrowers to maintain a certain level of homeowners’ insurance.

In addition to coverage in case of an injury on your property, a homeowners’ insurance policy generally covers damage to the structure of the home, essential elements or fixtures of the home, and damage to personal property inside the home. The coverage in each of these categories, however, is limited by your specific policy.

Landlords and tenants, however, have different needs than homeowners. Fortunately, there are specific property insurance types aimed at them.

Special insurance

In certain geographic zones, certain hazards are not covered in a standard homeowners’ policy. In these zones, separate special policies can be purchased to cover those hazards. For example, in California, earthquakes are excluded from most standard homeowners’ policies. Special earthquake insurance policies, however, are available to be purchased separately to cover losses caused by an earthquake. These policies vary  

Landlord insurance

Since renting out your property is actually a business, a homeowners' policy does not provide coverage for this purpose. Specific landlord insurance policies can provide coverage.

As with any property insurance, you pay a predictable amount on a regular schedule, and you won't have to pay out of pocket if there are unexpected damages to the property that are covered by your policy. The extent of coverage depends on the individual policy. Basic policies typically cover damage to the property you rent out, but will not extend the protection to furniture, appliances, or other items that are a part of the property you rent. The coverage can be extended to protect these things and you can also get additional coverage for water damage (due to plumbing system breakage or flooding), legal costs, loss of income and more.

Renters' insurance

Some landlords require tenants to take out renters' insurance. Even if it’s not required in the lease, it's a good idea to purchase a renters’ insurance policy. Landlords may want to consider updating their Lease Agreement to require tenants to purchase one. Renters’ insurance covers the personal property of renters, as well as provides liability coverage in case someone, such as a guest, is injured inside the renters’ property.

Landlord insurance does not cover the personal property of a renter, even under expanded coverage. This means that if the renter's personal property is damaged when the landlord's property is damaged, the landlord may get the benefit from insurance payments, while tenants are forced to cover their own losses. The extent of coverage for renters' insurance varies depending on the policy and the circumstances of the loss.

How to review an insurance policy

Before committing to any insurance policy, whether you’re a homeowner, renter, landlord, or a business owner, always read the insurance agreement in detail to understand the coverage you are buying before you sign on the dotted line. It is also a good idea to make sure you are getting enough coverage for your property and belongings. Preparing a Home Inventory Worksheet can help you understand how much coverage you need for your personal belongings.

It can be helpful to compare different policies. To do this, you can make a list of the different insurance companies’ policies and include the premium costs, type of coverage, and coverage amounts. It can also be smart to list the exclusions for each policy. If you have questions about a specific insurance company’s policy, you can often talk to an agent to learn more about it.

If you have more questions about what type of insurance or coverage is right for your property, reach out to a Rocket Lawyer network attorney for affordable legal advice.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.

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