If you’re a homeowner looking to rent out your property, having the right insurance coverage can make all the difference. Learn what policies you need to protect your investment.

Regardless of whether you own a studio apartment or a four-bedroom house, being a homeowner means that you’ve made a big investment in a piece of property. Of course, many people choose to live in their condo or home. But plenty of homeowners are also choosing to rent out their investment.

Whether you plan to travel, rent elsewhere, or live in another property you own, while you have tenants in your home, insurance is one of the best ways to protect your investment.

In this article, we’ll discuss the importance of personal insurance, the three policies that are associated with homeownership, and what insurance for rental properties makes the most sense.

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The Importance of Personal Insurance

Personal insurance offers you financial protection in your life for the things that aren’t related to a business. This, of course, differs from commercial insurance, which provides coverage for a company or business.

For example, as a homeowner, you don’t need to consider commercial property insurance or professional liability insurance. You will, however, want to find the right coverage for your home that covers you in the event of an accident, theft, or damages.

Personal insurance lines, such as homeowner’s insurance and renter’s insurance, can help give you peace of mind in a scenario that involves:

What’s the Difference Between Home and Renter’s Insurance?

Homeowner’s insurance and renter’s insurance may seem like they should be similar. But there are actually many differences between the two types of coverage.

Home insurance covers everything from the property to your personal belongings, as well as your personal liability.

Related: What does homeowners insurance cover

On the other hand, tenants insure themselves with renter’s coverage. This type of policy does not offer protection of the physical rental unit that the tenant is living in. It does, however, cover a variety of other things, such as:

  • Contents
  • Personal liability
  • Theft
  • Additional living expenses

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Do Landlords Need Home or Renter’s Insurance?

As a landowner, you actually don’t need either. If you’re renting out your property, and you don’t live there, homeowner’s insurance won’t cover you. And tenant’s insurance is a policy designed for your renters, not for you.

Instead, the type of coverage that you need is known as landlord insurance or rental property insurance.

What Is Landlord or Rental Insurance?

Insurance for rental properties protects you as the landlord against financial loss. Typically, this type of coverage will offer:

  • Property coverage that protects your house or any detached structures on your property in the event of damage
  • Contents coverage for your personal items or belongings, like major appliances, that are on the premises
  • Liability coverage, which protects you if a tenant or guest injure themselves on your property
  • Loss of rental income coverage that compensates you for lost earnings if your tenants must move out due to insured damage

Related: Does tenant insurance cover damage to landlord’s property

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Should You Ask Your Renters to Get Tenant’s Insurance?

Even if you have landlord insurance, you may be faced with unexpected costs due to the actions of your renters. With that in mind, it’s always a good idea to request that your tenants also get their own coverage.

It’s important to note that tenants are not legally required to get renter’s insurance in Canada. So, if this is an additional layer of protection you would like, you’ll need to follow up with your tenants directly. For example, you could include tenant’s insurance as a requirement for your renters before accepting their tenancy.

Summary: The Insurance You Need as a Landlord

When it comes to renting your investment property, here’s a breakdown of the three types of insurance discussed in this article:

  1. Homeowner’s Insurance: You do not need this as a landlord.
  2. Landlord Insurance: You do need this as a landlord.
  3. Renter’s Insurance: You do not need this as a landlord but you should consider asking your tenants to get it for themselves.

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