Can You Keep Your Homeowner's Insurance If You Rent Out Your Home?

Posted on: 6 September 2019

Platforms like Airbnb have made renting homes to short-term travelers a lucrative way of earning extra cash. Long-term rentals are also excellent for cashing in on otherwise unoccupied homes. Whether you make your home a haven for weary globetrotters or plan on becoming a full-fledged landlord, any move you make will affect your existing homeowner's insurance policy.

Want to know if you can hold on to your policy while renting out your home? Consider the three scenarios below and the options you'll have at your disposal.

If Renting Out is a Temporary Event…

Let's say you're renting out your home to a relative or close friend as a one-time deal. Such rentals usually last for only a short amount of time, making full-fledged landlord insurance impractical. As a workable compromise, your insurance company may be willing to extend your current homeowner's insurance coverage to cover short-term rentals.

Another option for your insurance provider is to provide short-term rental coverage as part of an endorsement. Insurance endorsements are simply modifications made to your current policy in order to provide additional coverage under unique circumstances. Adding an endorsement to your homeowner's policy may raise premiums temporarily, however.

If You Plan on Sharing Your Home…

So, you're diving head-first into the world of short-term rentals by renting out a room or two on a regular basis. In this case, you may not be able to use your homeowner's insurance to cover risks posed by your would-be tenants. Popular rental platforms offer their own liability coverages, but these won't cover every single situation you or your tenants encounter. In addition, the complex claims process may put you off from taking full advantage of the built-in coverage. 

Even if you're still living in your home, your insurance provider may limit or even cancel your homeowner's insurance policy if parts of it are up for rental. Your only other option is to shell out for landlord insurance, which offers broader protections for your home as well as other structures on your property.

If You Plan to Rent Out Regularly…

Turning your entire home into a rental property is lucrative, but you'll also lose your homeowner's insurance coverage. Landlord insurance is a must, but purchasing business insurance is also a prudent step. The latter covers your home-turned-business-asset while protecting you from common commercial business liabilities, such as injuries that occur within the rental home.

No matter what choices you make, honesty is always the best policy when dealing with insurance companies. Not being completely forthcoming with your property rental intentions could result in denied claims and cancelled policies.