Homeowners insurance does not typically cover renters. If you are renting out your home, you’ll likely need to carry landlord insurance, and your renters should carry renters insurance.
What homeowners insurance covers for renters
In most cases, renters are not covered under the owner of a home’s insurance policy. Standard home insurance — technically called an HO-3 policy — is specifically designed for homeowners, their spouses, and relatives residing in the home.Â
These policies are not intended to cover tenants or boarders. Unless a renter is a legal relative of the homeowner, they generally cannot be listed as a "named insured" on the homeowner's policy, meaning they have no direct access to its benefits.
What homeowners insurance doesn’t cover for renters
HO-3 policies primarily focus on the physical house (the dwelling) and the owner’s personal belongings. Because a tenant doesn’t have an ownership stake in the dwelling, standard home insurance does not provide them with the same financial safety net. A renter’s furniture, electronics, clothing, and other belongings are not covered by the homeowner’s HO-3 policy, either.
In addition, homeowners policies include two critical protections that do not extend to tenants:
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Loss of use coverage: This helps pay for hotel stays if a home becomes uninhabitable due to damage from a covered event like fire or storm. An HO-3 policy will not cover these costs for a renter.
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Personal liability coverage: If a tenant’s guest is injured and the tenant is found responsible, the homeowner’s liability coverage generally will not pay for resulting legal fees or medical bills.
To protect their belongings and personal liability, tenants typically need to purchase renters insurance (called an HO-4 policy).
Types of insurance needed in rental situations
There are two main types of home insurance needed in rental situations: landlord insurance and renters insurance.
Landlord insurance
The landlord should carry landlord insurance to protect the dwelling, other structures on the property (like detached garages, fences, and sheds), and any personal property they intend to keep at the rental. Landlord insurance also offers liability coverage in case someone is injured or their property is damaged due to unsafe conditions in the rental.
In this way, landlord insurance shares many of the same properties as a traditional home insurance policy. However, landlord insurance costs about 25% more, on average, according to the Insurance Information Institute.Â
Pro tip:Â The best landlord insurance policies offer coverage for loss of income if a rental property is uninhabitable during repairs or reconstruction if the space was damaged by a covered loss. This is often called fair rental value coverage.
Renters insurance
The tenant should also carry renters insurance to protect their personal property, to offer liability coverage, and to help pay for living expenses in the event the rental space becomes temporarily unlivable.
Additional insurance considerations for rental property owners
Much like a standard home insurance policy, landlord insurance usually comes with a number of exclusions. Damage from floods, earthquakes, and sewer backups, for instance, isn’t typically covered by a landlord policy. So, if you own a rental, it’s important to consider additional coverages, such as:
As a landlord, you may also want more liability coverage than a standard policy offers. You can extend your level of liability coverage with umbrella insurance. It acts as a safety net that kicks in to help pay for legal costs or medical bills if a major accident costs more than your basic policy can cover.
When homeowners need a different policy for renters
If you’re letting a friend or family member sleep on your couch or in a guest room for a short period of time — whether they’re visiting for a holiday or just need a place to stay while they remodel their home — you likely don’t need any additional home insurance coverage. After all, it’s not transactional; as long as you aren’t charging them to stay at your place, it’s not considered a business.
However, when you start renting out your home and profiting from it, you’ll probably need to make the switch to landlord insurance. And if you have long-term renters, encourage them to carry renters insurance to protect themselves, too.
Why renters need their own renters insurance
If you’re renting a room, studio, apartment, condo, home, or any other type of dwelling, you might think you’re totally off the hook when it comes to insurance. After all, the landlord is the one who has a financial stake in the building, not you.
But tenants need their own renters insurance policy for several reasons, including:
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Protecting your personal property: If your apartment is robbed, burns down, or is otherwise damaged by a covered incident (called a peril), your own belongings are only covered if you hold a renters insurance policy. Make sure you get adequate coverage for all your belongings. If you own high-value items, like jewelry, art, or collectibles, you might want to add scheduled personal property coverage, which provides a higher level of protection for your valuables.
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Protecting against liabilities: If you’re responsible for a guest’s injury or the destruction of their property in your rented space, you could be on the hook for related costs, such as medical expenses and legal fees. Liability coverage for renters protects you in such scenarios.
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Paying for living expenses: If the space you’re renting becomes uninhabitable due to a covered peril and you’re forced to move into temporary housing, like a long-term hotel, renters insurance can help cover those costs.
Landlord vs. tenant insurance responsibilities
When there’s a rental involved, both the landlord and the tenant have insurance responsibilities. Here’s a clear breakdown:
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Landlord insurance protects the physical structure of the home the landlord owns and any of the landlord’s possessions in the space.
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Renters insurance protects the renter’s property, such as clothing, furniture, and electronics.
Both policies include liability coverage, as well.
Frequently asked questions
Does home insurance cover someone renting a room?
If the owner permanently resides in the home and simply rents out a room, their HO-3 policy covers the physical dwelling, their belongings, and their liability. However, the tenant’s belongings are not covered by the homeowner’s policy. Without renters insurance, the renter will also be lacking personal liability protection and additional living expenses coverage (while an HO-3 includes these benefits for homeowners). Before renting out part or all of your house, talk to your insurer to determine which types of coverage best apply to your situation. In certain scenarios, an endorsement or a landlord insurance policy may offer broader protection for homeowners. Additionally, encourage tenants to carry renters coverage.
Does renters insurance cover the building?
Renters insurance does not cover the building. It’s designed to protect the tenant only, including their personal belongings and their liability. Landlords will need a separate policy to cover the building.
Can a landlord require tenants to have renters insurance?
While there are no federal or state laws requiring renters insurance, landlords can — and often — require it in their lease agreement with tenants. As a landlord, always check state and local laws before requiring renters insurance.
Are tenants covered under landlord insurance?
Landlord insurance is designed for landlords and does not protect tenants. Instead, tenants should carry renters insurance to protect their personal property and to offer liability coverage in the event that a tenant is responsible for someone’s injury or property damage.
What happens if a renter causes damage?
If a renter causes damage to your property, contact your insurer. Depending on the type of damage (and so long as it’s not a result of general wear and tear or negligence), it might be covered by your landlord insurance.
You may also be able to use the funds from the tenant’s security deposit to cover repair costs or come to an agreement with your tenant to pay for the repair or replacement. Depending on the extent of the damage, or if there are any disputes, you can also take the tenant to small claims court.
