If you own a house that you want to rent out, you’ll need to have it insured. The type of policy and coverage you need will depend on your specific plans and circumstances.
When Your Current Homeowners Insurance Policy Might Apply
If you live in your house and you just want to rent it out occasionally on a short-term basis, your standard homeowners insurance policy may or may not provide the protection you need. In some cases, you might have to purchase short-term rental coverage. Check with your insurer to understand its rules and get the right coverage in place before you take in short-term renters.
The person(s) that you plan to rent the property to might be a factor. An insurance company might look at the situation one way if you want to rent the property to a tenant who isn’t related to you and look at it differently if you want to rent the property to a family member. An insurer might also want to know if an area that you plan to rent out is attached to the rest of the house and if it has its own entrance.
When You Might Need to Purchase Landlord Insurance
A standard homeowners insurance policy won’t be appropriate if you don’t live in the house and you plan to rent it out on a more long-term basis (even if it’s just for a few months at a time). In that case, you’ll need landlord insurance.
That type of policy will provide financial protection if the house gets damaged by a covered peril, such as a storm or fire. If someone gets injured at the rental property and files a claim, the liability portion of a landlord insurance policy will cover medical expenses, as well as legal bills related to the incident. Landlord insurance might also compensate you for lost rent if the property gets damaged and is uninhabitable. Landlord insurance doesn’t cover a tenant’s belongings. You can encourage or require a tenant to purchase renters insurance.
Make Sure You have the Right Insurance Coverage
Insurers set their own rules regarding rental properties, and different companies might look at your circumstances and plans in different ways. Before you rent out a property, do your homework and make sure that you have the appropriate insurance coverage. Start by reviewing your current homeowners insurance policy to see what it says about coverage for rental properties and find out if you would be covered. If you discover that you will need different coverage, or if you have any questions, contact your insurance company or agent. If you have to take out a new policy, shop around to find the best rates available.
