What is the difference between a dwelling policy and a homeowners policy?

Many homeowners may ask themselves “what is dwelling insurance?” and, better yet, “do I need it?” But before we get into what dwelling insurance covers, it’s important to understand what a dwelling is.

Your dwelling includes the house you live in and anything attached to the structure itself, such as a garage, deck or porch. It also includes any built-in appliances you may have.

What does dwelling insurance cover?

Dwelling insurance is a part of your standard homeowners insurance policy. It covers the structure of your home, as well as specific perils that can damage your property. Structures that aren’t directly attached to your home, such as a separate guest house, are not typically covered by dwelling insurance, but may still be covered by other parts of your homeowners insurance policy.

The only common thing about a Homeowners Insurance Policy and a Rental Dwelling Policy – also known as a Dwelling Fire Policy, is that both of them cover real property, but the coverage specifics greatly differ from one another. Therefore, regardless if you’d like to rent out your own property or maybe buy an investment property, it’s safe to say that by having only a homeowner’s insurance policy you’re going to suffer from limited coverage.

Rental Dwelling Policy also is known as Dwelling Fire Policy

Occasional Rentals

If you plan on renting your property, a homeowners insurance policy may be adequate to have only if the rental is going to be a short-term rental, if you’re going to live within the residence or if the rental is on an isolated basis. For instance, you can consider adding a rider to your homeowner’s insurance if you just want to rent a room in your property. Also, if you’re the type who just rents their property for a few weeks during the summer vacation, then you don’t need to worry about getting new coverage.
However, in most other circumstances, your property becomes a business endeavor as soon as you rent it out, so that is why you need to get the right insurance policy for it. So in the event, you’d need to make a homeowners insurance claim, there’s a high chance that it’s going to be denied if you no longer live in your home. This is especially the case if you haven’t informed the insurer that you’ve allowed a tenant to move in and that you have moved out.

Additional Needs

There may be cases when your insurer is going to honor a claim even if you have moved out of your home, but the terms in your policy won’t be able to address any issues with the tenant. The majority of homeowner insurance policies will only cover the damage to your possessions and property and in the event, someone is injured on your property, they also cover your personal liability.

But if a tenant is at fault, then they won’t cover liability in the event the tenant himself or his guests are injured while being in your property. To cover such damages, you need to get a landlord policy. In general, if you want liability coverage with your homeowner’s insurance policy, you’ll need to pay extra, but that’s not the case if you go with a landlord policy. There are 3 separate tiers that this type of coverage can be bought in, so it’s easy to tailor it to meet your specific concerns and needs.

Your Rental Income

Since landlord insurance policies are meant for business enterprises, they have many other pros over a standard homeowners’ insurance policy, especially when you decide to rent out your property. So if you go with the extra coverage, you’re going to be covered if something happens to the property and it cannot be inhabited anymore. This can be either through the actions of your tenant or natural disasters. In this case, the insurer will reimburse you a large amount of rent, usually for up to 12 months, if during the repairs your property cannot be rented out.

Your Tenant’s Property

Damage to the tenant’s property is covered by neither landlord nor homeowners insurance policies. If you do want to ensure that all your bases are covered, then you can be specific in your lease and stress out the fact that your tenant should buy his own renters insurance.

Of course, you should always check with your independent insurance agent to check the specific coverage that your policy includes or excludes.

Buying a home means protecting your investment, and one of the most common ways to get that protection is by purchasing insurance. Mortgage companies require it, and having the right insurance policy in place will bring you peace of mind as well as coverage in case something unexpected happens. There are different types of policies available for different types of homes and homeowners. As you look at the various options and begin the process of applying for insurance, you may wonder why some homes qualify for a dwelling policy rather than homeowners insurance. There is a major difference between the two types of coverage that can help you understand.

A dwelling policy covers only the physical structure of the home. A homeowners insurance policy is more comprehensive and covers not only the physical structure but also the contents inside the home. When you have a homeowners insurance policy in place, everything is covered during a catastrophe, from the actual property to the furniture inside it, as well as collectibles, clothing and even the décor. When a catastrophe occurs and a dwelling policy is in place, the insurance company will not cover any of the contents. It will pay to replace the structure of the home, but it will not replace anything you had inside.

A home will qualify for a dwelling policy instead of a homeowners policy if the homeowner is not living in the property itself. If you buy a house that is not your primary residence, you will likely be able to purchase a dwelling policy instead of a homeowners policy. This is most common when property investors buy homes that they will put on the rental market. An investment home does not require a complete homeowners insurance policy. Coverage for the dwelling only is enough because the renters will presumably carry their own renters coverage to protect whatever personal possessions or contents they bring into the home.

If you are buying a house that you plan to live in, a dwelling policy will not be enough. In that case, you will want a full charge homeowners insurance policy to protect you and your family’s appliances, clothing, furniture and other items that you will keep in the house. When you live in the home, you expect coverage for everything you have with you. That’s why a dwelling policy won’t work for the home you use as a primary residence. There is more coverage available to you through the homeowners insurance.

Both types of policies are in place to protect you and your home against fires, floods and unexpected storms and weather. When you have a homeowners policy in place, you’ll also be protected against things like theft and vandalism. If you decide to move out of your home and begin renting it out to tenants, remember to convert from a homeowners insurance policy to a dwelling policy. Each plan covers your investment in different ways.

What is the difference between home and dwelling?

Which of the following is covered under a dwelling policy?

What are the four basic categories of coverage in a homeowners policy?