Understanding Insurance Policies

A Quick Guide To Insurance When You Rent Out Your Home

29 January 2016

Samantha Reynolds

If you plan on renting out your house, the best way to protect your home is through an insurance policy. That way, if your renters damage your house or if your home is damaged in a qualifying event, your investment will be protected. However, the type of insurance you need depends on your rental set-up and situation.

Long Term Rental

If you plan on renting your home to the same person or family for an extended period of time, with a lease that lasts 3 or more months, you are going to need a landlord policy.

Landlord policies cover the physical structure of your home. They also protect any personal property you leave on your property for tenant use or for maintenance. Examples of personal property that would be protected under such a policy include lawn mower, leaf blower, snow blower, etc. 

Many landlord policies will also cover your lost income from not being able to rent your property if it is undergoing repairs or being rebuilt because of an event covered under your insurance policy. For example, if a tree fell on your home during a wind storm and broke through your roof, your insurance would cover the repair as well as the rent you lost while unable to rent out your property. 

Frequent Short-Term Rentals

If you are planning on renting your home to different guests on a frequent basis, your standard homeowner's insurance policy most likely will not provide you with coverage during these rental times. If you use a website to regularly rent your home out to guests that you don't personally know, such as through one of the many popular home rental and sharing websites, your insurance company often classifies those types of rentals as business arrangements.

In order to protect your house if you plan on frequently renting your home on short-term basis to strangers, you need to look into purchasing either a bed and breakfast insurance policy or a hotel insurance policy. These are both different types of business insurance policies. Your insurance agent would be able to let you know what type of business insurance you would need based on how frequently you rent out your home and based on the rules and laws of your state. 

Occasional Short-Term Rental

If you plan on only renting your house occasionally and for a short duration, you may already be covered under your existing homeowner's insurance policy. Some homeowner's insurance companies, but not all, allow you to rent out your home for short-term rentals, such as for a specific week or weekend. Check with your insurance company and see if short-term rentals are covered under your existing policy.

If short-term rentals are not covered, you may be able to purchase an endorsement for your homeowner's insurance policy that will cover your property and your guests during their rental period. These endorsements are usually only valid for a specific-time period and the specific renters that are listed on your policy.

Before you rent out your home, make sure that you have the right insurance in place. No matter what insurance policy you have in place, make sure that any renters, short or long term, also obtain their own renters insurance. Your renter's personal belongings will not be covered by your insurance policy. For more information, contact companies like East Tennessee Mutual Insurance. 

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