Do you want to rent out your home? There are a number of different scenarios where a homeowner may wish to rent out their home. You may want to rent out your home as a vacation rental, long or short term rental, or even rent out a single room. As the homeowner you will still need to provide homeowners insurance even though you plan to rent it out. However, when renting out your home to a tenant(s) your original homeowner insurance policy may not cover the losses that may occur. You will want to consider seeking a more specialized homeowners coverage policy when you want to rent out your home. InsureWise LLC will share a few thoughts about homeowners insurance coverage when renting out your home.
Insurance for Short Term Rental / Primary Residence
Each homeowner will have a different vision or plan on how they will rent out their home. If you wish to rent out part or all of your primary residence for a short period of time, there are two types of insurance scenarios that you will what to consider. A short term rental often describes a weekend or week long rental agreement and not months or years. It is important to know how an insurer looks at a short term rental to better get the right type of insurance. Here are the two short term insurance scenarios:
• Some insurance providers may allow a homeowner or renter to cover a tenant under the current policy, however you will need to notify your insurance company. Other insurance companies will require an endorsement to add to the existing insurance policy.
• If you plan to rent out your home for a short term on a regular basis to guests, this now is considered a business. A standard homeowner policy does not provide coverage for a business. You will need to get a business policy. Seek a policy that is similar to a hotel or a bed and breakfast policy to legally cover your home.
Long Term Rental / Second Home Insurance
If you have a second home that you wish to rent out on a longer term basis, typically anything over six months, you will need a landlord or rental dwelling policy. It is very common for homeowners to rent out a second home to a person, couple or families for a long term dwelling. Many people with poor credit cannot afford to buy a home and need something bigger than an apartment. This is where house renters have become very popular. If you want to rent out your home long term, you will need a landlord policy. A Landlord policy will cost about 25% more than the average homeowners policy. This inflation is necessary as many renters will leave the home in a poor condition. You, as the landlord, will find you need to repair and restore the home after many renters.
A Landlord policy provides property insurance coverage for physical damage to the home’s structure from fire, lightning, wind, hail and ice. Landlord policies also cover on-site maintenance which includes appliance repair, lawnmowers, and other equipment used to maintain the property. Landlord policies cover liability coverage in case a renter or tenant gets injured on the property. Some landlord policies will also cover losses of rental income. If a tenant does not pay rent or in the event the home is being repaired due to an unforeseen accident, the loss of income will be covered.