Homeowners insurance for rental properties

If you rent out your house for short periods of time, homeowners insurance (with a short-term rental endorsement) should cover your property and liability while it’s being rented, but if you rent out your home for months or years at a time, you’ll need rental property insurance , or landlord insurance to be sufficiently covered.

As the landlord, you’re only responsible for the building and your own property. Tenants’ personal belongings are not covered by your policy — so they’ll need renters insurance to cover their own personal property.

Do I need homeowners insurance for a rental property?

If you buy a house and plan on living there full-time, you'll need homeowners insurance to protect your property and personal belongings. But if you're using the home as a rental property, your insurance needs may change, as standard homeowners insurance may not cover your rental property or any injuries you’re responsible for as the owner.

If you plan on renting out the home long-term, you’ll likely need rental property insurance, or landlord insurance, which is a type of policy designed to protect rental properties. In terms of insurance risk, insurers view a rental property differently than a home you primarily live in but rent out intermittently. Be sure to talk to your provider to discuss your coverage needs.

Do I need to change my homeowners insurance if I rent out my house?

If you live at your home most of the year and rent out the entire property or a room intermittently, your existing homeowners insurance policy may cover your guests, provided you let your insurance company know the deal beforehand.

While some insurers may be cool with covering short-term guests, others may view it as a contentious issue, as even short-term rentals can present an increased risk. It’s possible that your insurer will require something like a home-sharing coverage add-on to cover liability occurrences while the home is rented out. 

Homeowners insurance for Airbnbs

If you rent out your property intermittently through short-term rental services like Airbnb, be sure to let your insurance company know in advance of the rental period. Some insurers may not require additional coverage if you let them know in advance, but others may require you to purchase a home-sharing coverage endorsement that supplements your homeowners insurance policy. Additionally, Airbnb provides a couple of their own options, including:

• Host Protection Insurance - Host Protection Insurance is Airbnb's native insurance policy that provides up to $1 million in liability coverage per occurrence for bodily injury or property damage and covers property damage in common areas of the building (if you're renting out an apartment or condo

• Host Guarantee Insurance - Host Guarantee Insurance provides up to $1 million in protection to hosts in the event that a guest damages your property and the loss happens to exceed 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

Be sure to read the fine 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 coverage.

What is rental property insurance?

Rental property insurance, also referred to as landlord insurance, is the type of financial protection you’ll need if you rent out property as a source of income. Rental property insurance functions similarly to normal homeowners insurance in that it covers the rebuild value of the property itself and your personal belongings on the premises, but there are a couple of additional protections that it provides. 

Since you’re essentially operating a business when you rent out property, you’ll need specialized coverage only found in rental property insurance, such as loss-of-income protection. This reimburses you for lost rental income in the event your property is damaged by a covered peril and you’re unable to rent out your property. 

Your tenants will also need somewhere to stay while the property is being rebuilt or repaired. With loss-of-income coverage, you don’t have to worry about expensing that Airbnb or hotel room on your own dime. 

Rental property insurance also includes general liability coverage in the event a tenant or a tenant’s guest is injured on your property and you’re held liable for medical expenses. Liability coverage in a standard homeowners insurance policy doesn’t extend to businesses, including rental properties. 

What does rental property insurance cover?

If you're planning on renting out your home long term, you're going to need rental property insurance , or perhaps more commonly known as landlord insurance .

Landlord insurance provides the following coverage:

• Dwelling coverage - Covers reconstruction or repairs to the structure of the rental property

• Coverage for landlord’s personal property - Covers items and appliances on the premises that are owned by the landlord, like dishwashing machines, washer and dryers, and items used for maintenance like shovels, rakes, and lawnmowers

• Liability coverage - Covers legal expenses if your guests or tenants if are 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 due to a covered loss

What does rental property insurance typically exclude?

Rental property insurance includes some amount of coverage for the landlord’s personal belongings on the property. An example of this could be gardening tools that you keep in a maintenance room, or patio furniture in an outdoor common area. 

However, coverage doesn’t extend to your tenants’ furnishings or personal belongings. Rental property insurance also won’t cover damages if it’s proven you knew about the issue prior to the loss. Take for instance a fire in your building that occurred due to a busted oven or gas leak that you were well aware of, as evidenced by the multiple maintenance requests filed by your tenant. In that case, your insurer could consider you negligent and may not cover the loss.

Similar to homeowners insurance, rental property insurance also won’t cover buildings that have been vacant for a certain number of days, so if the duplex you rent out has been empty for a few months and there’s a break-in, your insurer may not cover the loss. 

Is paying for rental property insurance worth it?

Yes, if you have a property that you rent out to tenants, then getting rental property insurance is a must. If you plan to take out a mortgage on a rental property, your lender will likely require coverage before extending you a loan. 

Does homeowners insurance cover renters?

No, if you rent out property, your rental property insurance will cover the structure of the building and your financial interest in the property, but your policy won’t cover your tenant or guest’s personal property. Your tenant will have to purchase their own renters insurance policy to cover their personal belongings and liability.