When you transition from homeowner to landlord, your insurance needs change, and so do your responsibilities. If you're renting out property in Seattle, you might wonder what type of insurance coverage is required and who pays for home insurance when renting. The short answer: it depends on the type of insurance and who it covers.

In this guide, we'll explain the difference between homeowner and landlord insurance, what you’re responsible for as a rental property owner, and what renters need to have in place to protect their belongings.

Why Isn't Homeowner's Insurance Enough for Rental Properties?

If you once lived in your home and had a standard homeowner’s insurance policy, that coverage doesn’t carry over when you convert the property into a rental. Once someone else signs a lease and starts paying rent, your home is no longer considered “owner-occupied,” and most standard policies become void for landlord use.

Homeowner's insurance typically excludes:

• Damage caused by tenants
• Rental income loss
• Legal liability related to tenant injury or lawsuits

As a landlord, you’re operating a business. That means you need insurance that reflects the risks and responsibilities that come with that business.

What Kind of Insurance Do Landlords Need?

Landlords should have what’s commonly known as rental property insurance or landlord insurance. These policies are specifically designed for properties that are not owner-occupied and generate rental income.

A comprehensive landlord insurance policy typically includes:

• Property damage coverage for repairs after events like fire, water damage, or storms
• Rental income protection in case the unit becomes uninhabitable due to covered damage
• Liability coverage if a tenant or guest is injured on the property

You don’t add this to your homeowner's policy—you replace it. Every investment property you rent should have its own dedicated policy suited to its use and risks.

Who Pays Home Insurance When Renting?

This is a common point of confusion for new landlords. Let’s break it down:

Landlords pay for landlord insurance.

As the property owner, you are responsible for insuring the structure itself and carrying liability coverage in case of tenant-related legal issues. This policy protects your investment and your rental income.

Tenants pay for renters' insurance.

Renters are not responsible for insuring the building. However, they are responsible for protecting their personal belongings and any liability they may have for injuries to guests or accidental damage they cause.

Most Seattle property managers recommend (and some require) that renters carry an active renters' insurance policy throughout the duration of their lease.

Why Renters' Insurance Is Still Important

Even with the right landlord coverage in place, it’s critical to require renters' insurance for every lease. Your policy doesn’t cover tenant belongings, and if a tenant’s guest is injured or their personal items are damaged in a fire or theft, they’ll have to pay out of pocket without renters' insurance.

Renters' insurance helps cover:

• Replacement of personal property
• Liability for guest injuries
• Temporary housing if the unit becomes uninhabitable

Making renters' insurance a lease requirement protects your tenant and reduces the risk of disputes or uncovered losses during a claim situation.

What Does Landlord Insurance Cover?

Here’s a closer look at the essential protections your landlord policy should include:

Property Damage Coverage

Your rental property is one of your most valuable assets. Even with regular maintenance, disasters can happen—fire, flooding, vandalism, or damage caused by a tenant. Landlord insurance helps cover the cost of repairs or rebuilding so you can restore the unit and minimize downtime.

Loss of Rental Income

If your property is damaged and becomes temporarily uninhabitable, rental income protection helps bridge the gap. You’ll receive compensation to cover the rent you would have collected during the repair period, reducing the financial strain.

Some landlord policies include this by default, while others require a separate rider, so it’s essential to review your policy carefully.

Liability Protection

Even well-maintained rentals can be the site of accidents. If a tenant slips and falls or makes a claim against you for injury, liability coverage can help cover legal costs, settlements, and judgments. Without it, a single lawsuit could threaten your entire portfolio.

Do You Need Insurance for Each Rental Property?

Yes. Each rental property should be covered by its policy. While you may be able to bundle properties under one provider for cost savings, each unit poses unique risks. A property manager can help you evaluate what coverage makes sense based on location, property type, and tenant demographics.

How Can a Property Manager Help With Insurance?

Managing risk is part of managing property. Experienced property managers in Seattle can guide you through the process of selecting the right insurance providers and policies. They can:

• Review your current coverage and identify gaps
• Recommend riders for unique property risks
• Ensure tenants maintain active renters' insurance
• Assist with claim documentation and repair coordination

With their local knowledge and experience, a property management company helps you avoid the costly mistakes that can arise from being underinsured or improperly insured.

Are You Covered? A Property Manager Can Help!

Skipping or underestimating insurance coverage can lead to massive out-of-pocket costs when something goes wrong. Whether it’s a burst pipe, a liability claim, or unexpected tenant damage, proper coverage ensures you’re not financially derailed.

If you're unsure what kind of insurance you need (or whether you're already covered) partner with a Seattle property manager who can help you assess the risks and secure your investments.

Learn more about the protections you need for success with a free copy of our Guide to Protecting Your Investments!