Have you ever thought about renting out a room or your entire home for extra income? Before you decide this is a good idea you have some things to think about. Rental of a room or your home could be considered a business and changes the circumstances of your insurance policy. Insurance carriers do not contemplate business exposures when insuring a single family home. How many rooms are rented and for how long will play a factor in whether or not your home insurance policy will provide the proper coverage for this exposure. The National Association of Insurance Commissioners (NAIC) offers some advice for those considering such a change.
First thing to consider is what the risk is. Ask yourself “What if”. What if your property is vandalized? What if your guest gets injured on your property? As a host, your homeowners or Condo insurance policies are not designed to cover accidents arising from property rented out and your insurance company may deny coverage for any resulting claims. Another thing to consider would be to find out if this type of rental falls outside of local zoning or housing laws and regulations. If that is the case it could result in violating local law or code in which case you might have to hire legal counsel to protect and defend yourself.
Everyone knows that accidents happen at the most inconvenient times and can be something as simple as a guest or renter tripping on an area rug. Most homeowner’s policies provide coverage if a visitor falls and is injured however the scenario is slightly different if it is a paying guest that falls in your home. The coverage you have may not be intended for business use. Without liability insurance protection your Homeowners or Condo insurance policy might leave you without coverage. Most standard Homeowner’s policies have minimal to no coverage if a homeowner is running a business in their home. Once you begin renting out either a part of or your entire home, you could be considered a home-based business in the eyes of your insurance company. Your insurer could claim that you’re essentially running a hotel or bed and breakfast and deny coverage.
To make sure you are protected, talk to your agent about your situation. If you only occasionally rent a room or your house, your current homeowner insurer might be willing to provide some coverage to protect you. If you rent your house for a long term, purchasing a landlord policy (also known as Dwelling insurance might be your best option as this will cover your home, structures on the property and contents that you own such as appliances and furniture among other things. To find out more information on whether you may need additional insurance coverage, call or stop by one of our 8 FBinsure convenient locations.