Renting out your house to people who are visiting your area for a short time can be an excellent way to generate extra income. Before you open up your home to renters, you will have to make sure that you have the right insurance coverage. Your current homeowners insurance policy might not apply.
A Rental Platform Might Provide Some Coverage
Some online platforms that connect hosts and short-term renters offer coverage that can protect hosts if something goes wrong. Depending on the platform, you might automatically be eligible for free insurance coverage that will provide you with financial protection if a guest gets injured or experiences property damage or if a guest damages your property while staying there. Even if you get coverage from an online rental platform, you should still have your own insurance to be sure that you’re adequately protected.
Why Your Current Homeowners Insurance Policy Might Not Be Enough
Homeowners insurance generally applies to short-term guests, such as friends and family, who are staying at your home free of charge. If you rent out your home on a short-term basis, that can dramatically change things when it comes to insurance coverage.
Homeowners insurance policies typically don’t provide coverage if a house is used to operate a business. Your insurance company might take the position that renting out your home on a regular basis would mean that you are operating a hotel or a bed and breakfast.Â
You might be required to purchase a separate insurance policy specifically designed for that type of business. That can be costly. Some insurance companies offer policies with coverage that only applies when a guest is renting out a property.
You might be able to purchase an endorsement or rider from your current homeowners insurance company and add short-term rental coverage to your existing policy. You might have to pay for continuous coverage, or you might only have to pay for times when your home is rented out.Â
Some homeowners insurance policies provide coverage if a home is rented out infrequently for a particular event. If that’s the case, you might have to notify the insurer in advance or purchase an endorsement.Â
Contact Your Insurance Company or Agent
Homeowners insurance policies can differ significantly when it comes to what is and isn’t covered. Before you rent out your home on a short-term basis, carefully read over your policy.Â
If you have any questions, contact your insurer or agent. Explain how often you intend to rent out your home, whether you want to rent out your entire house or just one or more rooms, and whether you will be there while guests are staying in the house. Discuss your insurance options and, if you need to purchase a separate policy, request quotes from several insurers.
