Do I Need a Landlord Policy If I Do Not Collect Rent?

A client called the office about a house she owns in Norman. Her daughter lives there. She does not charge rent. She wanted to keep the house on her homeowners policy, and I had to tell her no. This comes up often enough that it deserves a full explanation.

The rule is about who lives there, not about money

A homeowners policy is written for a home the policyholder resides in. A landlord policy, sometimes called a dwelling fire policy, is written for a home the owner does not reside in. Whether rent changes hands does not enter into it.

A lot of people believe that if they do not collect rent, it can just be a homeowners policy. That is not true. You do not reside in the home. That is the whole test.

Why it matters at claim time

Picture the worst day. The house catches fire. You show up when the ambulance is there and your claim adjuster is there, and the adjuster asks where you were. You say you do not live here. Then it is an issue.

The policy was written on the understanding that you live in the house. When that turns out to be false, the carrier has a reason to question the claim at the exact moment you need it paid. Nobody wants to have that conversation standing in the yard.

What a landlord policy actually covers

Landlord coverage is structured differently from a homeowners policy, and once people see the pieces it usually makes sense.

The dwelling

The structure itself, including wind and hail. This is the big one and it works the way you expect.

Landlord-provided property

Personal property coverage on a landlord policy is very minimal, on purpose. It only covers things like the fridge, the stove, or the washer and dryer if you are the one providing them. Your daughter's or your tenant's belongings are covered by their own renters policy, not yours.

Rental income loss

If the home burns down and is being rebuilt for months, you are losing the rent for however long that takes. The carrier provides a set cap of how much you would get monthly, as if it were still being rented. If you are not collecting rent today, this piece matters less, but it costs little and the day you do rent the house it is already there.

Liability

Liability coverage on a landlord policy always has to be high. The last thing you want is the tenant walks in, the ceiling fan falls on their head, and they blame you for it. We carry high liability protection on every landlord policy we write.

Deductibles

We have deductibles as low as $1,000 on a landlord policy.

The discount most owners miss

On a landlord policy you want to bundle your own home and auto with us, because the discount is massive. This is not exaggerating: probably 25 to 40 percent off. If you already insure your residence and your cars here, adding the rental is usually cheaper than owners expect.

Short-term rentals

If the property is an Airbnb or another short-term rental, the answer today is different. Short-term rental coverage is coming to our office soon, but it is not available yet. Tell us about the property and we will reach out the moment it is.

What to do this week

If you own a house that someone else lives in, pull up your policy and look at the type. If it says homeowners, call us at (405) 253-7879. Moving it to a landlord policy before a claim is a short conversation. Doing it after one is not.