Home warranty vs. Landlord insurance

[Charlotte Dunford]

Do you recommend purchasing both landlord insurance and home warranty? Is it worth the money? I have rental that is older, but with relatively newer water heaters, and AC unit and appliances. I am afraid that something might go horribly wrong that costs me a ton. Thoughts?

[Mike McCarthy]

They cover two very different things.

Landlord insurance covers the house itself from major catastrophe (fire, tree falling on it, etc) as well as liability (someone trips and breaks their leg while on your property). I’d say this insurance is 100% required.

Home warranty will help pay for a broken furnace or washing machine. Some people like them because they help lessen the financial impact, but many investors stay away from them because they are not cost-effective in the long term. You’d be better off ‘self insuring’ and put aside enough money to repair/replace the fridge or ac when needed.

Most people can’t afford to self-insure against a fire or liability lawsuit, thus the need for insurance.