If you own a home, you probably already have homeowners insurance to protect your investment from covered losses. These days, many homeowners decide to rent out their old homes rather than sell them. However, a standard homeowners policy may not cover damages that occur when your house is being rented out, depending on the situation and the length of the rental term.
There may be a variety of situations under which you want to rent your home. The situation may involve either a short-term rental of your primary residence or a long-term lease of a second home.
Short-term Rental of Primary Residence
If you are planning on renting your primary residence for a very short period of time, such as one week or several weekends, some insurers may allow this if you notify the company in advance. Other insurance companies might require a rider to your existing policy to cover your home.
If you are renting out your primary residence to various guests for short periods of time on a regular basis, this would constitute a business. You would not be covered under a homeowners insurance. You are effectively running a business and will need business insurance.
For this type of arrangement, you live in your primary residence and a tenant lives in a structure that you own, such as a second home or an apartment complex. A homeowners policy will not cover you for such an arrangement. In this case, you would need to carry a type of business insurance known as a landlord or a rental property policy. A rental property policy is a little different than a typical homeowners policy since it is set up to cover the unique arrangement of someone living in a structure that you own.
A rental property policy has three types of coverage:
- Physical damage coverage for damage to the building itself
- Personal property coverage for the landlord's belongings that are left on-site for maintenance or tenant use (such as a lawnmower or washer/dryer)
- Liability coverage for legal fees if a tenant or guest gets injured on the property
A rental property policy is very important for a landlord, and you will want to get one in place before your first tenant moves in. Risks are increased when you rent your property for longer periods, such as six months or a year. These additional risks will be reflected in your premiums, which generally run higher than the cost of a standard homeowners policy.
Once you get a tenant, it is a good idea to talk to him or her about a renters insurance policy. A renters insurance policy will protect the possessions that your renter brings with them to the rental.
What about Airbnb?
Airbnb is a rental website where people are listing lodging accommodations for short-term rental guests. This could mean subletting a single room for travelers or renting out your home while you are away on vacation. However you are renting it out, you want to make sure that you are covered.
With Erie Insurance, you have options to customize your existing coverage for home sharing, depending on what you are renting and for how long.
- Renting out your primary home: If you want to rent out your own residence, whether it is the whole home or a spare bedroom, ask about adding the new home sharing endorsement to your ErieSecure homeowners policy. This is designed for people renting their home fewer than 180 consecutive day per year.
- To rent out a rental property like an apartment complex or cottage, an ErieSecure Rental or Ultrapack Plus policy has built-in coverage for home sharing.
Many other insurance companies also offer home sharing endorsements to your homeowners policy. Talk to your agent to discuss your options.
Becoming a landlord is exciting and can be a bit overwhelming. Residential property is a major investment. We can help you ensure you have the right insurance coverage you need to properly protect your home and rental properties.
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