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Homeowners insurance for a second home
Homeowners insurance for rental property
Your guide to understanding the kinds of homeowners insurance you'll need for rental property.
Homeowners insurance protects your home and personal property when its damaged by perils like fire, wind and theft, and covers your personal liability if a guest is injured in your home and sues you for damages. If you rent out your property for short periods of time, homeowners insurance may cover your guests, but if you rent it out long-term as a form of income, that requires landlord insurance or a more robust homeowners insurance policy.
Certain home sharing services, like Airbnb, offer their own rental coverages – like Host Guarantee and Host Protection – which supplement coverages not found in standard homeowners insurance policies. If you’re a renter who’s subletting your apartment, you’ll need renter’s insurance to protect your things (assuming you left the apartment furnished) but your tenant will most likely need their own renter’s insurance policy to cover their stuff.
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If you live at your home most of the year and rent out the entire house or a room in your house intermittently – like for a big event or a home swap – your basic homeowners insurance policy will usually cover your guests if you let your insurance company know the deal beforehand.
While some insurers may be cool with covering short-term guests, others may at the very least view it as a contentious issue, as they don’t want the added burden of liability for someone not related to the policyholder.
Be sure to read the find print carefully to see what your carrier’s policy is regarding insurance coverage for guests, or speak with a licensed representative at Policygenius, who can walk you through your policy’s terms and conditions and let you know if you need to add riders or additional coverage.
Some homeowners insurance companies will offer rental riders or endorsements to your policy. If you’re renting out your home and your insurer doesn’t provide coverage for even short-term rentals, you’ll need this rider to cover your personal liability if the tenant is injured in your home and presses charges.
If you’re planning on using your home solely for the purpose of renting it out to others,, you’re going to need landlord insurance, which is commonly referred to as rental dwelling insurance. Landlord insurance generally costs about 25% more than standard homeowners insurance policies, and provides:
Dwelling coverage: Covers reconstruction or repairs to the house.
Personal property coverage: Covers items you own and leave on site for maintenance, like shovels, rakes, and lawnmowers.
Liability coverage: For your guests or tenants if they’re hurt on your property and file a lawsuit.
Loss-of-rent coverage: Reimburses you for lost fair rental value if you’re unable to rent out property if it becomes uninhabitable due to a covered loss.
If you rent out your property for short periods on a regular basis to various guests, some insurers may stipulate that you run a business and you’ll need to add a business operations policy (BOP) to cover guests. BOPs are policies specifically designed for small businesses and bed and breakfasts and have two main coverages that apply to renting a room in your home: business interruption insurance (covers loss of income resulting from a fire or other covered loss that interrupts your business) and liability insurance (covers your legal responsibility if someone is injured on your property).
If you own property and rent it out through home-sharing services like Airbnb, there are a couple options for you and your guests to make sure you’re properly covered.
Host Protection Insurance
Host Protection Insurance is Airbnb’s native insurance policy and has similarities to standard landlord insurance. It provides up to $1 million in liability coverage per occurrence for bodily injury or property damage, covers property damage in common areas of the building (if you’re renting out an apartment or condo), and landlords and homeowners associations are covered in certain cases when claims are filed against them due to a guest suffering an injury or if a guest damages building property.
Host Guarantee Insurance
Host Guarantee Insurance provides up to $1 million in protection to hosts for damages to covered property in the event that a guest maliciously damages your stuff and the damage happens to be more than the security deposit. The Host Guarantee doesn’t cover belongings like cash, jewelry, or expensive art, and should not be considered a replacement for homeowners or renters insurance.
If you rent out property that you’re leasing and you have renters insurance, your policy will cover your personal property and personal liability, but won’t cover your tenants or guests.
Before you consider renting out or subletting your home, you’ll want to check your lease to be sure it’s even allowed under the terms dictated in your lease. If your subletter caused damage to the property or building and your contract stipulated that subletting isn’t allowed, your landlord could possibly sue you for damages, and that wouldn’t be covered by your renters insurance.
About the author
Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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