Landlord insurance and homeowners insurance protect different types of properties. Homeowners insurance applies to owner-occupied homes, while landlord insurance is for rental properties that face tenant-related risks and higher liability exposure.
Property insurance is easy to misunderstand. In many cases, homeowners only realize they aren’t covered when they file a claim and get denied. They assume that a standard policy is enough for all situations. Unfortunately, that’s rarely the case, especially for investors who lease out multiple properties.
Although opting for the bare minimum coverage seems cheaper at first, being underinsured puts you at risk of several disasters. You’re always just one peril away from shelling out hundreds of thousands of dollars. Let’s protect your investment.
Here’s what you should know about homeowners insurance vs landlord insurance so you can choose the proper coverage for your needs.
Key Differences Between Landlord Insurance and Homeowners Insurance
Landlord insurance and homeowners insurance cover different risk profiles. Homeowners insurance typically applies to owner-occupied homes, while landlord insurance is designed for income-producing, tenant-occupied properties.
Once a property is leased, the risk shifts from personal use to third-party occupancy and income dependency. Misunderstanding this distinction is one of the most common reasons for denied claims among rental owners.
Here’s a quick overview of their biggest differences:
|
Category |
Landlord Insurance |
Home Insurance |
Intended use |
Rental and income-generating properties |
Owner-occupied primary residences |
Occupancy assumption |
Third-party tenants (not including guests and short-term rentals) |
Property owner and household members |
Property coverage |
Covers building structure and landlord-owned fixtures |
Covers building and homeowner’s personal property |
Personal belongings |
Limited or excluded unless the landlord owns furnishings |
Included for homeowner’s contents |
Liability protection & exposure |
Higher limits to account for tenant and visitor risk the landlord may be legally responsible for |
Lower limits based on personal occupancy risk |
Loss of rental income |
Included or available as an endorsement |
Not covered |
Tenant-related claims |
Covers accidental tenant-caused damage depending on insured peril (excluding tenant belongings) |
Not applicable |
Legal defence coverage |
Included for tenant or visitor injury claims |
Included for personal liability claims |
Vacancy tolerance |
Designed to handle partial or extended vacancy |
Vacancies often restricted or excluded |
Rental activity |
Explicitly permitted |
Typically excluded without endorsement |
Claims eligibility |
Valid for tenant-occupied properties |
Claims may be denied once property is rented |
Premium cost |
Higher due to increased risk and broader coverage |
Lower due to personal-use risk profile |
Source: Pexels
Which Insurance Do You Need for a Rental Property in Ontario?
The way your property is used determines the type of insurance you need. Even partial rental activity can change how a property should be insured and how claims are evaluated. Use this guide to know which insurance policy to get for your property.
- Get homeowners' insurance if your property is fully owner-occupied and not used for rental purposes, and you need coverage for the building, your personal belongings, and personal liability.
- Get landlord insurance if any unit or portion of the property is leased to tenants.
- Get both homeowners and landlord insurance for mixed-use properties, such as owner-occupied homes with basement apartments.
Note: Neither policies cover a tenant’s personal belongings. Tenant or renters insurance is a separate policy tenants must purchase to cover their own belongings and liability.
Comparing Landlord Insurance Cost vs Homeowners Insurance Cost
Landlord insurance in Ontario generally ranges from about $800 to $1,500 per year for basic coverage. However, your actual premiums vary based on several factors. An insurance company will generally assess your property’s location, construction type, additional coverage limits, security systems, and rental income amount.
As for the average homeowners' insurance cost, expect it to be slightly cheaper because the risk profile of an owner-occupied property is generally lower. However, insurers will assess your insurability. The location, age, and construction type of your living space heavily affect the total cost of your monthly premiums.
Source: Unsplash
FAQs About Landlord Insurance Coverage
Most property owners do need both policies for the same living space. Homeowners insurance is designed for owner-occupied portions of a property. However, those leasing units benefit from landlord insurance coverage. Rental activity introduces additional third-party liability risks, which standard homeowners' policies are not designed to handle.
No. A standard homeowners policy excludes rental activity, so it doesn’t protect you from property damage or third-party liability claims. You can’t rely on home insurance for leased spaces.
Between home and landlord insurance, the latter is generally more expensive because it has broader coverage options. You’re basically paying for more security. Apart from protecting your investment property, it also has loss of rental income and liability coverage.
In Summary
- Homeowners insurance is designed for owner-occupied properties and typically excludes rental activity.
- Landlord insurance is built for income-generating, tenant-occupied properties, with higher liability exposure.
- Landlord insurance covers building damage, third-party liability, and potential loss of rental income.
- Homeowners insurance often costs less than landlord insurance because it carries lower liability and no rental income risk.
- Mixed-use properties, such as owner-occupied homes with rental units, may require both homeowners and landlord insurance.
- Choosing the wrong policy can lead to denied claims and significant out-of-pocket losses.
Get the Right Coverage for Your Investment Property With KASE Insurance
You don’t have to interpret policy wording, exclusions, or coverage limits on your own. KASE Insurance is an award-winning specialty commercial insurance brokerage you can rely on for clear insurance policies that work for you. Whether you’re leasing a small apartment or managing multiple buildings, we’ll draft a policy that matches your needs.
Book a call with our insurance specialist today. We’ll identify coverage gaps in your current policy, recommend adjustments, and provide a sample estimate.