Just like tenants, landlords also require insurance coverage to protect their property from perils. This is crucial considering the high level of risk at hand. In fact, about one-third of U.S. homes are vulnerable to natural disasters, not to mention other perils such as fire, theft, water damage, and accidents, as per CNBC. A single peril can throw you into financial turmoil, which is why insurance coverage is essential. Therefore, every U.S. landlord should carry landlord and habitational insurance coverage policies. Read on to learn the basics of habitational insurance vis-a-vis landlord insurance.

What Is Landlord Insurance?

This policy is designed to protect landlords from financial losses emanating from property damage and liabilities. For instance, if a visitor slips and falls on your rental property, breaking a part of their body, the landlord's insurance will pay for the treatment and compensation costs. This policy also covers financial losses in case of physical damage to the rental property. Landlord insurance also pays for the income lost due to unpaid rent. It typically costs about 15 percent more than a regular homeowner’s or renter’s insurance policy. 

What Is Habitational Insurance?

Habitational insurance is nearly similar to landlord's insurance, only that it majorly covers liabilities. It covers financial losses resulting from tenants’ injuries and damage to rental property. Habitational insurance is specifically meant for residential properties used for commercial purposes. Such include condominiums and apartments. Most habitational insurance policies provide coverage for general liability and excess, rental property, and environmental-impairment liability.

Major Differences Between the Two

The major differences between landlord insurance and habitational insurance are: 

• Landlord insurance only covers damage to the building structure, while habitational insurance also covers the contents of the property, including HVAC systems.
• Habitational insurance covers liability costs, while landlord insurance can pay for many more aspects, including the income lost due to unpaid rent.
• Landlord insurance is suitable for any rental property, while habitational insurance provides specific benefits for residential rental properties used for commercial purposes. 
• Landlord insurance excludes flood and earthquake coverage, while some habitational insurance policies may provide this policy. Most habitational insurance policies allow policyholders to add flood and earthquake riders.

Is Habitational Insurance Required?

No federal law requires landlords to carry habitational insurance in the U.S. However, this doesn't mean that you should skip this coverage. Habitational insurance is a crucial coverage that every landlord should have. With it, you will rest assured that in case a tenant gets injured on your property, you will not suffer the financial consequences that will arise. It will also enable you to cover all the liability costs that may arise in case of accidents or damage on your commercial rental properties. 

Some lenders require their clients to have habitational and landlord insurance. If you have a mortgage or are financing a property, you may want to have habitational insurance. Be sure to confirm the requirement for habitational insurance coverage from your lender.

Speak to Habitational Insurance Experts at Graystone Insurance Group

When it comes to protecting your investment, you want to work with reputable agents who understand the importance of transparency. To get a better understanding of your policy and its overall costs and coverage, contact the agents at Graystone Insurance Group. We will help create a customized policy for your specific needs.