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Trying to figure out if you need homeowners insurance or landlord insurance to cover your duplex can be complicated.

And get this: 

Duplexes are an increasingly popular housing option, with 9% of Americans living in a multi-family home, so protecting the property and the people inside requires some form of duplex insurance.

In this post I will cover how to select the best option for your unit since the coverage you need will vary based on several factors which we discuss below.

What Type Of Insurance Do I Need For A Duplex?

To determine the best duplex insurance policy, you first need to determine your living arrangement. You’re responsible for paying the premiums in each case, but the coverage varies dramatically between them.

The three possible living arrangements include:

1. You own the duplex and are the sole occupant 
2. You own the duplex, live in it, and are renting the other side.
3. You own the duplex and rent out both sides.

These living arrangements influence everything from the duplex insurance cost to your responsibility for repairs. It also dictates whether you need to take out additional policies to cover potential shortcomings.

What Type of Insurance Policy Should I Have If I Am The Sole Occupant?

If you own a duplex but Don't rent out either side, you need a standard Homeowners Insurance policy, also known as HO3 insurance. This policy covers a range of duplex damages and repairs for a sole occupant duplex property.

That includes the damage to property as well as your belongings and small structures, like a pool or fence. Some banks and lenders require you to get it when you purchase a property. It protects you against common perils, including:

• Damage from aircrafts
• Damage from cars
• Explosions
• Fire and smoke
• Lighting
• Riots and civil unrest
• Theft
• Vandalism
• Volcanoes
• Wind and hail

Most insurance providers do not include earthquake or flood coverage. If you want to protect your duplex from either natural disaster, you’ll need to take out a separate policy.

What Type of Insurance Do I Need If I Completely Rent Out a Duplex?

If you rent both sides of a duplex, you need a Landlord Insurance policy also known as DP3 insurance. This type of Landlord Insurance policy covers damage to the building structure, loss of use, and liability. You may also add coverage through endorsements.

What Does A DP3 Landlord Insurance Policy Cover? 

DP3 insurance is similar to a traditional homeowner’s insurance policy while being exclusive to rentals. For instance, both insurances have identical Coverage A policies.

They compensate you in full if you need to rebuild the property after a natural disaster or fire. DP3 and homeowner’s insurance differ for Coverage B through F. The policy gives ideal protection for the physical structure against fire damage, which is why the insurance industry occasionally calls it dwelling fire insurance. 

Landlords favor D3 insurance because it includes loss of rent protection via Loss of Use coverage. The insurance provider will compensate you if there is property damage that causes loss of rent. Some policies will continue paying you while contractors handle the duplex repairs.

What Does A Landlord Insurance Policy Not Cover? 

A DP3 rental property policy does not automatically cover structures or sheds, personal property, or liability.  It also excludes additional living expenses if the duplex is uninhabitable, and the tenants have to live somewhere else temporarily. While this policy protects the physical structure it does leaves the property open to other perils.

That includes:

• Earthquakes
• Floods
• Government action
• Lightning
• Mold
• Neglect
• Power failure
• War
• Water damage

What If I Rent One Unit and Live in the Other One?

Your two choices are HO3 and DP3 insurance. The answer will vary based on the regulations of where you live. HO3 is the more comprehensive option, so try to get an HO3 duplex insurance quote first. Some insurance providers won’t let you buy HO3 insurance, even though the premiums are 20 to 30% higher.

An insurance agent may provide a DP3 quote, which may satisfy your current living situation. If you need additional coverage, request add-ons for personal property since DP3 only covers structural damage.

Note that the same coverage does not work if you own one half, and someone else owns the other.  The owner of each half needs to purchase a condominium insurance policy, also known as HO6 insurance.

What Other Things Should I Cover If I Rent Out My Duplex?

No federal laws require you to purchase landlord insurance if you own a duplex.

Real estate and managing property are significant commitments, though, so it’s worth considering some form of insurance to protect your investment.  The minimum coverage is DP1 insurance, which compensates you for damage from common named perils.

You have four additional ways to insure a rented duplex: 

Personal Property Coverage (Coverage C) - protects the tenants' personal belongings from damage. Each policy has a limit, typically $100,000, so owners can replace or repair their items under that amount.

Loss Of Use Coverage (Coverage D) - It applies when the duplex is no longer habitable, and tenants have to live somewhere else. The insurance covers their basic living expenses, such as hotel stays, while the tenants find somewhere else to live.

Personal Liability Coverage (Coverage E) -  Landlords use it to assist tenants who sustain an injury due to negligence. Negligence, in the legal sense, means that you are at fault.

Medical Liability Coverage (Coverage F) -  is a complement to Coverage E and pays for medical bills if there is an accident at the duplex.

Take Action

Duplex insurance is straightforward once you consider your living arrangement. As long as you are living on the property, you should purchase HO3 insurance. If you are renting both sides, DP3 insurance is an entry-level option.

You can always add coverage to protect the tenant's belongings and liability later. Still not sure which option to choose? Run the numbers for yourself with our duplex insurance calculator. If you are ready to go you can click on any of the above buttons.