Decoding Differences: Is Landlord Insurance The Same As Building Insurance?
Property insurance can be a complex product, with many investors struggling to understand the difference between landlord and building insurance. While both are essential for property owners, they serve distinct purposes. In this blog, we’ll discuss the differences between landlord and building insurance and answer key questions about their coverage and necessity.
What is landlord insurance?
Landlord insurance is tailored specifically for property owners who lease their property to tenants. This type of insurance covers the risks associated with renting, which typically aren’t included in standard building insurance. It can include coverage for:
- Loss of rental income — If the property becomes uninhabitable due to an insured event (e.g., a fire), landlord insurance may cover the lost rental income.
- Tenant-related damage — Covers malicious damage caused by tenants or their guests.
- Liability protection — If a tenant or visitor sustains an injury on the property due to negligence (e.g., slipping on a poorly maintained staircase), landlord insurance can cover legal costs and compensation claims.
What is building insurance?
Building insurance covers a property's physical structure, including its walls, roof, floors and often permanent fixtures such as plumbing, electrical systems and built-in appliances, like solar panels. It also covers the cost of repairs or rebuilding if the property suffers sudden and unforeseen damage caused by fire, storms, vandalism or certain other perils.
For example, imagine a severe storm causes a tree to fall onto the roof of the property, leading to extensive damage. In this scenario, building insurance would cover the costs of repairing the roof and any additional structural damage caused by the impact.
Key differences between landlord and building insurance
Now that we understand landlord and building insurance, it’s important to distinguish between these two types of insurance to ensure comprehensive protection for the investment property.
Landlord insurance is designed to address the unique risks associated with renting out the property for an extended period of time, such as loss of rental income or damage caused by tenants. Building insurance primarily protects the property's physical structure, including the walls, roof and permanent fixtures, such as plumbing and electrical systems.
If the property becomes uninhabitable due to an insured event like a fire or flood, building insurance won’t cover the loss of rental income. However, landlord insurance often includes this type of protection, ensuring you’re not financially impacted while the property is being repaired.
Check out our table below for an overview of these key differences:
| Feature | Landlord Insurance | Building Insurance |
| Primary Coverage | Risks related to leasing, such as rental loss and tenant damage. | Physical structure and permanent fixtures. |
| Tenant-Related Coverage | Covers tenant damage and legal liabilities. | Not covered. |
| Rental Income Protection | Included if the property is uninhabitable due to an insured event. | Not included. |
| Applicability | Essential for landlords to lease their property. | Essential for all property owners. |
Answering key questions — landlord insurance vs. building insurance
Given their stark differences, property investors are naturally curious about the best policy for their needs. In a nutshell - landlord insurance is highly recommended if you’re renting out the property, even if you already have building insurance. Building insurance doesn’t cover tenant-related risks, such as loss of rental income or liability for tenant injuries, which landlord insurance does.
Why both policies matter for landlords — our final thoughts
So, which policy is the right solution for your clients? Put simply, a combined policy is best.
While building insurance is crucial for protecting the physical structure of the property, landlord insurance complements it by addressing the unique risks landlords face. Having both policies can ensure the following:
- Comprehensive coverage for the property and financial interests.
- Peace of mind knowing you’re prepared for both structural damages and tenant-related issues.
- The ability to recover financially from unforeseen incidents without compromising your investment.
Choose the right landlord and building insurance policy for your clients with SGUA
At SGUA, we understand the unique needs of rental property owners and have more than 30 years of experience as an experienced insurance underwriter. We offer policies that safeguard property structure and the risks associated with leasing, covering a range of events from natural disasters to tenant-related issues.
Unity and integrity are at the forefront of who we are, as we aim to deliver top-notch customer service to our clients. If you’re a broker seeking the best insurance options for your clients, SGUA is your trusted partner. To obtain a building or landlord insurance quote with SGUA, please contact us today.