If you’re renting out a property in Utah—whether it’s a single-family home, a condo, or a unit in a multi-family building—one of the most critical mistakes you can make is assuming your standard homeowners insurance will protect you. It won’t.
Homeowners insurance and landlord insurance (also called rental property insurance or dwelling fire insurance) are fundamentally different products designed for different situations. Using the wrong one can leave you completely uninsured when you need coverage most. Let’s break down the key differences and help you understand what you need as a Utah landlord.
The Fundamental Difference
Homeowners Insurance is designed for owner-occupied residences—homes where you live. The insurance company assumes you’re present to monitor the property, maintain it regularly, and have a vested interest in preventing damage.
Landlord Insurance is specifically designed for properties you own but rent to others. The insurance company recognizes that rental properties have different risk profiles because you’re not living there, tenants may not care for the property as carefully as owners would, and various liability issues arise from the landlord-tenant relationship.
Why Homeowners Insurance Doesn’t Work for Rentals
Standard homeowners insurance policies contain explicit exclusions for rental activities. If you rent out your property while covered by a homeowners policy and file a claim, your insurance company will likely:
- Deny the claim entirely
- Cancel your policy for misrepresentation
- Refuse to defend you in liability lawsuits
- Potentially void coverage retroactively
Even if you’re renting to family or friends at below-market rates, or if you only rent seasonally, homeowners insurance typically doesn’t provide coverage once rental activity begins.
Some homeowners incorrectly believe they can occasionally rent their property (like through Airbnb) under homeowners insurance. This is also incorrect—short-term rentals require specialized coverage.
Coverage Differences: What Each Policy Includes
Property Coverage
Homeowners Insurance:
- Covers the dwelling structure
- Covers personal property (your belongings)
- Covers additional structures (sheds, fences, detached garages)
- Often includes coverage for landscaping
Landlord Insurance:
- Covers the dwelling structure
- Does NOT cover tenants’ personal belongings (they need renters insurance)
- Covers additional structures
- Covers appliances and systems you provide
- May offer limited or no coverage for landscaping
- Often covers on an “actual cash value” basis rather than replacement cost (though replacement cost is available)
Liability Coverage
Homeowners Insurance:
- Covers liability for injuries to guests
- Covers liability for accidents on your property
- Assumes owner-occupancy risks
Landlord Insurance:
- Covers landlord liability for tenant and visitor injuries
- Addresses risks specific to rental relationships
- Covers liability from property conditions
- May include coverage for discrimination claims (though Employment Practices Liability coverage is separate)
Additional Living Expenses
Homeowners Insurance:
- Pays for hotel, meals, and other living expenses if you can’t live in your home due to covered damage
- Called “Loss of Use” or “Additional Living Expenses”
Landlord Insurance:
- Pays for lost rental income if your property becomes uninhabitable due to covered damage
- Called “Fair Rental Value” or “Rent Loss Coverage”
- Continues covering your mortgage and other expenses even when you can’t collect rent
What Landlord Insurance Costs vs. Homeowners Insurance
Landlord insurance typically costs 15-25% more than comparable homeowners insurance because rental properties present higher risks. For a typical Utah rental property worth $400,000:
- Homeowners Insurance: $1,000-$1,500 annually
- Landlord Insurance: $1,200-$2,000 annually
The exact premium depends on:
- Property age, condition, and construction type
- Location and local crime rates
- Coverage limits and deductibles you select
- Whether you require tenants to carry renters insurance
- Your tenant screening practices
- Number of units (multi-family properties cost more)
- Claims history on this or other rental properties
Special Situations and How They’re Covered
Vacation Rentals and Short-Term Rentals
If you rent your property on Airbnb, VRBO, or similar platforms, neither standard homeowners nor typical landlord insurance provides adequate coverage. You need specialized short-term rental insurance that addresses:
- Higher turnover and wear
- Guest injuries
- Guest property damage or theft claims
- Business interruption from platform suspension
- Higher liability limits for commercial activity
Seasonal Rentals
If you rent your property seasonally (like a ski cabin rented in winter) and use it personally at other times, you need a policy that addresses both uses—often a specialized dwelling policy or landlord policy with personal use endorsements.
House Hacking
If you live in one unit of a multi-family property and rent the others, you need a specialized policy that combines homeowners coverage for your unit with landlord coverage for rental units. This is sometimes called an “owner-occupied multi-family policy.”
Rent-to-Own Situations
These arrangements typically require landlord insurance until ownership transfers, as you remain the property owner during the rental period.
Key Coverage Components of Landlord Insurance
Dwelling Coverage
This is the foundation of landlord insurance, covering your rental property’s structure—walls, roof, floors, built-in appliances, and attached structures like garages. Make sure coverage reflects the full replacement cost, not just the purchase price or market value.
Loss of Rental Income
Also called fair rental value coverage, this reimburses lost rent if your property becomes uninhabitable due to covered damage. Coverage typically lasts 6-12 months, giving you time to complete repairs. This is crucial because your mortgage, taxes, and other expenses continue even when you can’t collect rent.
Liability Protection
Protects you if someone is injured on your rental property or if you’re held responsible for property damage. Common claims include:
- Tenant or visitor slip-and-fall accidents
- Injuries from property maintenance issues
- Dog bites (if you allow pets)
- Accidents in common areas
Minimum liability coverage is typically $500,000, but many landlords carry $1 million or add umbrella coverage for additional protection.
Medical Payments
Covers minor medical expenses for tenant or visitor injuries regardless of fault. This can prevent small incidents from becoming lawsuits. Coverage is typically $1,000-$5,000.
Vandalism and Malicious Mischief
Covers intentional property damage. This can be particularly important between tenants or if a tenant damages property before vacating.
Theft Coverage
Covers theft of property fixtures, appliances, and your belongings stored on the premises (but not tenants’ belongings—they need renters insurance for that).
Optional Coverage to Consider
Building Ordinance Coverage
If your rental property is damaged and building codes have changed since it was built, this covers the additional cost to bring the property up to current code during repairs. This is particularly important for older Utah properties.
Equipment Breakdown
Covers mechanical breakdown of HVAC systems, water heaters, appliances, and electrical systems. This can save thousands in repair costs and is often worth the small additional premium.
Umbrella Liability
Provides additional liability coverage above your base landlord policy limits. If you own multiple properties or have significant assets, umbrella coverage is essential. It typically costs $200-400 annually for $1-2 million in additional coverage.
Flood Insurance
Standard landlord policies don’t cover flood damage. If your rental property is in a flood zone or near water, purchase separate flood insurance through the National Flood Insurance Program.
Earthquake Insurance
Given Utah’s location along the Wasatch Fault, earthquake coverage is worth considering, especially for properties near the fault line.
What Landlord Insurance Doesn’t Cover
Understanding exclusions helps you manage expectations:
Tenant Property: Your landlord insurance doesn’t cover tenants’ belongings. You should require all tenants to carry renters insurance.
Intentional Damage by Tenants: While vandalism is covered, normal wear and tear or deliberate damage beyond vandalism typically isn’t. This is where security deposits come in.
Pest Infestations: Damage from rodents, insects, birds, or other pests is typically excluded. Prevention and maintenance are your responsibility.
Wear and Tear: Landlord insurance covers sudden, accidental damage—not gradual deterioration from aging or lack of maintenance.
Flood and Earthquake: As mentioned, these require separate policies.
Mold: Mold resulting from maintenance neglect typically isn’t covered, though mold from a covered peril (like a burst pipe) might be.
Utah-Specific Landlord Insurance Considerations
Winter Weather
Utah’s harsh winters create specific risks for rental properties. Ensure your policy covers frozen pipes and ice dam damage, and understand any requirements for maintaining heat in the property. If a property is vacant during winter, you may need to take special precautions or notify your insurer.
Multiple Properties
Many Utah landlords own multiple rental properties along the Wasatch Front. Some insurers offer multi-property discounts. Alternatively, once you own several properties, a commercial landlord policy might be more appropriate and cost-effective than multiple individual policies.
Property Management
If you use a property management company, inform your insurance company. Some insurers offer slightly better rates when professional management is involved, as it typically results in better property maintenance and tenant screening.
College Town Properties
If you own rental properties near universities like the University of Utah, BYU, or Utah State, you may face higher premiums due to increased turnover and potentially higher damage risk from student tenants.
Transitioning From Homeowners to Landlord Insurance
If you’re converting your current home into a rental property, contact your insurance agent before you rent it out—not after. The transition process typically involves:
- Notify Your Agent: Tell them you’re converting the property to a rental
- Review Your Options: Discuss whether to convert your existing homeowners policy or purchase a new landlord policy
- Adjust Coverage: Update coverage amounts, deductibles, and endorsements as needed
- Ensure Continuous Coverage: Don’t let coverage lapse during the transition
- Document Property Condition: Take photos before tenants move in
- Collect Tenant Insurance Info: Require tenants to carry renters insurance and provide you with proof
Should You Require Tenants to Have Renters Insurance?
Absolutely. Requiring renters insurance benefits everyone:
Benefits for Landlords:
- Tenant’s insurance covers their belongings, eliminating disputes
- Tenant liability coverage protects them if they accidentally damage your property
- Reduces likelihood of lawsuits against you
- Shows tenants are responsible
Benefits for Tenants:
- Affordable protection (typically $15-30 monthly)
- Covers belongings from theft, fire, and other perils
- Provides liability protection
- Often covers temporary housing if the rental becomes uninhabitable
Include renters insurance as a lease requirement and request proof of coverage annually. Make sure the policy names you as an “interested party” so you’re notified if coverage lapses.
The Bottom Line
Using homeowners insurance for a rental property isn’t just inadequate—it leaves you completely uninsured. The cost difference between homeowners and landlord insurance is modest compared to the financial devastation of having a claim denied or your policy cancelled for misrepresentation.
Landlord insurance is specifically designed to address the unique risks of rental properties, providing coverage for lost rental income, landlord liability, and property damage with the understanding that tenants—not you—occupy the property.
If you own rental property in Utah, proper landlord insurance isn’t optional—it’s essential protection for your investment and your financial security.
Get the Right Coverage for Your Rental Property
Whether you’re converting your first property to a rental or own multiple investment properties across Utah, we can help you find the right landlord insurance at competitive rates. We understand the unique challenges Utah landlords face and can ensure you have comprehensive protection without paying for coverage you don’t need.
Contact us today for a free landlord insurance review and quote. We’ll discuss your specific properties, rental situation, and coverage needs to find the best protection for your investment. Don’t risk operating with the wrong insurance—let’s make sure you’re properly protected.