Landlord insurance vs homeowners insurance in Henderson, NV

Homeowners insurance is for a Henderson home you live in. Landlord insurance is for a home you rent to someone else. Once you move out and a tenant moves in, ask your insurer (the company that issues the policy) about a landlord policy. Triple-I says it generally costs about 25 percent more. Your own price varies and is never guaranteed.

A landlord policy is also called a dwelling policy. The two policies look alike on paper, and both insure the building. They differ on three things: whose belongings are covered, what pays when the home cannot be lived in, and whether liability comes built in. Liability coverage is the part that pays if someone is hurt and blames you.

What is the difference between landlord insurance and homeowners insurance?

The difference between landlord insurance and homeowners insurance is who lives in the home. A homeowners policy covers a home you live in. A landlord policy covers a home you own and rent to someone else.

You can see this in the policy's own words. Triple-I publishes a sample homeowners form from the Insurance Services Office (ISO), a group that writes model policies. Here is how it defines the home it insures.

"Residence premises" means: a. The one family dwelling where you reside; b. The two, three or four family dwelling where you reside in at least one of the family units; or c. That part of any other building where you reside; and which is shown as the "residence premises" in the Declarations.

Insurance Services Office sample homeowners form HO 00 03 10 00, Definitions, as published by Triple-I. iii.org

Notice the words "where you reside." That sample is an older (2000) edition. Each insurer files its own version, so your policy's words control. But most homeowners forms are built the same way: around a home you live in.

A landlord policy uses a different family of forms. The North Carolina Department of Insurance, a state regulator, names three (this is a North Carolina source, and Nevada policies may differ): DP-1 basic, DP-2 broad and DP-3 special. It says a dwelling policy is typically used when the owner does not make the home their main residence. Rental homes are on its list.

Henderson has its own rules for very short rentals, covered below. For the full picture of a rented home, the Henderson landlord insurance guide walks through each part of a landlord policy.

What does each policy cover, side by side?

A homeowners policy and a landlord policy both cover the building, but they treat belongings, lost use and liability differently. Here is how a typical HO-3 compares with a typical DP-3 special form.

A few words in that table need a plain meaning. A peril is a cause of loss, like fire or wind. An exclusion is a cause the policy does not pay for, like flood or wear and tear. Insurers call that open perils, which is coverage for any cause not excluded.

On a DP-3, the North Carolina regulator says the house is covered on that open basis. Personal property is covered only for causes the policy lists. It also lists common DP-3 exclusions (causes it does not pay for), like neglect, mold, repeated leaks, earthquakes, and wear and tear.

Liability is the line to read twice. Triple-I says landlord policies include liability for a tenant or guest who gets hurt. The North Carolina regulator says dwelling policies typically do not. Both can be true, because forms differ. Your own quote decides it, so ask for liability in writing. The guide to liability coverage explains what that part pays.

How does lost rent coverage work on a Henderson rental?

Lost rent coverage, called fair rental value, pays the rent you stop collecting after a covered loss. It applies when the rented home is unfit to live in. It is the landlord's version of the hotel money a homeowner gets.

The ISO sample HO-3 has both pieces under one heading, Coverage D, Loss of Use. Additional living expense pays your extra costs when the part of the home you live in is unlivable. Fair rental value pays when the part you rent out is unlivable.

If a loss covered under Section I makes that part of the "residence premises" rented to others or held for rental by you not fit to live in, we cover the fair rental value of such premises less any expenses that do not continue while it is not fit to live in.

Insurance Services Office sample homeowners form HO 00 03 10 00, Coverage D, Fair Rental Value, as published by Triple-I. iii.org

Here is a made-up Henderson example. You rent your house for $2,100 a month. A covered kitchen fire makes it unlivable for 4 months. While it is empty, a $150 monthly lawn service stops.

• Lost rent: $2,100 times 4 months is $8,400.
• Costs that stop: $150 times 4 months is $600.
• Fair rental value in this model: $8,400 minus $600 is $7,800.

This is illustrative arithmetic only, not a quote and not a promise of any payment. Real payments depend on the claim, the limit and the policy terms. The same sample form will not pay for a lost lease, and it pays only for the shortest time needed to repair. The loss of use guide explains the homeowner side of this coverage.

What happens if you rent your home without telling your insurer?

If you rent out your Henderson home without telling your insurer, a later claim may be denied or reduced. The policy was priced for a home you live in, and the facts changed.

Triple-I puts it plainly. Depending on how you rent, your homeowners policy may not cover losses while the home is rented out. Here is its advice for a longer lease.

If you are planning to lease your home to one person or a couple or family for a longer period of time, say six months or a year, you will likely need a landlord or rental dwelling policy. Landlord policies generally cost about 25 percent more than a standard homeowners policy to pay for increased protections.

Insurance Information Institute, Coverage for renting out your home, Long-term rentals/Second home. iii.org

Three parts of the ISO sample HO-3 show why. First, it insures the dwelling "where you reside." Second, its liability part excludes most business activity. Renting counts as business, with only narrow exceptions. Third, it has a concealment or fraud condition: it provides no coverage to any insured if an insured intentionally concealed or misrepresented a material fact. Whether that applies to any situation depends on the facts and your policy's own wording.

How a claim turns out depends on the facts and your policy's own words. A step many owners take is to tell their insurer in writing before the tenant moves in. Ask whether to change the policy or switch to a dwelling form. For a claim question, ask your insurer or a Nevada attorney. If you are moving out to sell instead, the vacant home guide covers that case.

Can you rent a room or a casita and keep homeowners insurance?

You may be able to rent one room in the Henderson home you live in and keep a homeowners policy, if your insurer allows it. A casita rented to someone else is a different story. A casita is a small, separate guest house on the same lot.

Start with the room. The ISO sample form's business exclusion has an exception for renting part of the home you live in.

This Exclusion E.2. does not apply to: (1) The rental or holding for rental of an "insured location": (a) On an occasional basis if used only as a residence; (b) In part for use only as a residence, unless a single family unit is intended for use by the occupying family to lodge more than two roomers or boarders; or (c) In part, as an office, school, studio or private garage

Insurance Services Office sample homeowners form HO 00 03 10 00, Section II Exclusions, Business, as published by Triple-I. iii.org

In plain terms, the sample form's liability part still applies with up to two roomers or boarders. A roomer is a person who rents a room in your home. Three or more starts to look like a business. Two more limits come with it:

• Your roomer's things are not covered. The sample form excludes property of roomers, boarders and other tenants, unless they are related to you.
• A separate rental apartment has a small limit. For your appliances, carpet and furnishings in a rented apartment, the sample form pays up to $2,500 per apartment, and not for theft.

Now the casita. Coverage B in the sample form insures other structures, like a detached garage or casita. It does not cover one rented to someone who is not a tenant of the main home. The one exception is a private garage. Coverage B is also capped at 10 percent of the house limit (Coverage A). So a casita rented to a stranger may sit outside your homeowners policy.

Triple-I says some insurers need an endorsement for a rental, which is an add-on that changes what the policy covers. Ask for one, or for a separate policy on the casita. The Henderson home insurance guide covers the rest of a homeowners policy.

Does either policy cover a short-term rental in Henderson?

Often neither a homeowners policy nor a long-term landlord policy fits a Henderson home rented to a stream of short-stay guests, as written. Short stays need their own coverage and, in Henderson, their own paperwork.

Triple-I says an occasional short rental may be allowed on a homeowners policy if you tell the insurer, or with an endorsement. But renting your home for short stays on a regular basis is a business. A standard homeowners policy gives no coverage for business activity. Triple-I suggests a business policy instead, such as a hotel or bed and breakfast policy.

Nevada law makes each city set its own floor. NRS 268.09795 requires every city's short-term rental ordinance to set the minimum liability coverage a host must carry. Henderson's code sets it for rentals of less than 30 days. It allows an umbrella policy, which is extra liability coverage that sits on top of another policy.

A certificate of insurance indicating that the property is used as a short-term vacation rental and carries general liability coverage with policy limits of not less than $1 million per occurrence. An excess liability policy or umbrella liability policy may be used in addition to the general liability policy to meet the minimum liability requirements.

Henderson Development Code, section 19.9.4.F.3.e, Short-Term Vacation Rental, Registration Requirement. online.encodeplus.com

A certificate of insurance is a one-page proof of coverage. HOA homes have one more hurdle. Under NRS 268.09795(2)(h)(2), a city may not issue a short-term rental permit in an HOA community unless its rules expressly allow such rentals (a grandfather rule in subsection 5 protects some authorizations issued before July 1, 2022). Henderson's code can change, so confirm the current requirement with the City of Henderson before you list a property. The short-term rental insurance guide covers the coverage options, and the umbrella insurance guide explains that extra layer.

Does your tenant need renters insurance?

Yes, your tenant needs renters insurance to protect their own things, because your landlord policy does not cover them. Triple-I says your coverage is only on the building and your financial interest in it.

The Nevada Division of Insurance calls the renters form HO-4. It covers a renter's personal property up to a stated amount. It does not cover the building, since the owner insures that. The regulator also suggests renters consider liability coverage for an added cost.

Triple-I says many landlords ask a tenant to buy renters insurance before signing a lease. That can help avoid arguments over who pays for a tenant's things after a fire or a leak. The Henderson renters insurance guide is a good page to send your tenant.

What changes if your rental is a Henderson condo or townhome?

If your Henderson rental is a condo or townhome in an HOA, the HOA's master policy may already insure part of the building. A master policy is the one property policy the HOA buys for the shared building. Your own policy fills the rest.

Nevada law sets the split. NRS 116.3113(2) says that for buildings whose units are divided by horizontal boundaries or share common walls, the HOA's property insurance must include the units, to the extent reasonably available. Subsection 3 carves out certain wildfire-coordinating policies. The HOA policy need not cover upgrades owners put in. The Nevada Division of Insurance adds that a townhouse may be insured through your own homeowners policy or the HOA's master policy.

So the landlord question for a condo is a little different. You are not insuring the whole building. Ask the insurer which unit-owner form it uses for a unit you rent out, and whether it adds lost rent and liability. Then read the HOA's master policy so you know where its coverage stops. The Henderson condo insurance guide explains how to get the HOA's certificate of insurance and size inside coverage.

What happens to coverage between tenants?

A Henderson rental that sits empty too long can lose some coverage, so plan for the gap between tenants. Many policies have a vacancy clause, a rule that limits coverage when no one lives in the home.

The Nevada Division of Insurance warns about homes left empty, usually for 30 days or more. A loss may be excluded if no one was checking on the home. The ISO sample HO-3 drops its glass breakage coverage after 60 days of vacancy in a row. The North Carolina regulator lists a 60-day vacancy limit on DP-2 water damage coverage.

Between tenants, have someone visit the home on a regular schedule and keep a log. If the gap may run long, tell your insurer. The Las Vegas landlord insurance guide covers vacancy and other rental risks across the valley.

Which policy do you need?

The policy you need depends on who lives in the home and for how long. Find your situation in the table, then confirm it with your insurer in writing.

If two rows fit, plan for the stricter one and confirm with your insurer and, for short stays, the City of Henderson. A Henderson condo rented for short stays, for example, needs the HOA's permission, the city's rules and a policy written for that use.

The bottom line

Homeowners insurance fits a Henderson home you live in. Landlord insurance fits a home you rent to someone else. The switch point is the day you move out and a tenant moves in.

Before that day, tell your insurer in writing. Ask whether your new policy includes liability and lost rent. Ask your tenant for renters insurance. And if guests will stay less than 30 days, check Henderson's rules and its $1 million liability floor first.