Renting out your home can be tempting, especially if there is a special event or holiday going on in the general vicinity. Some people have made a lot on money with services like Airbnb, displacing themselves for a week or two and adding four figures or more to their bank accounts. But before you turn your home in to a gravy train, make sure you have the right insurance coverage in the event something happens to — or in — your property.
If you only plan to rent out your home once or twice a year, a standard homeowners policy will probably suffice. Some insurance companies may require a special endorsement. Either way, you should definitely notify your insurance professional about the rental. You may also want to consider mandating a renter’s insurance policy, as property belonging to the tenant would not be covered.
If you plan on renting out your residence several times a year on a regular basis, or have a vacation property for rental, this would constitute a business. Standard homeowners insurance policies do not provide any coverage for business activities conducted in the home. To be properly covered you would need to purchase a business policy—specifically either a hotel or a bed and breakfast policy.
If you are planning to lease your home for a longer period of time, say six months or a year, you will likely need a landlord or rental dwelling policy. f you are regularly renting out a vacation home or investment property, this would also require a landlord or rental dwelling policy. Landlord policies provide property insurance coverage for physical damage to the structure of the home, for any personal property you may leave on-site for maintenance or tenant use, and liability coverage.
Don’t take chances that could eventually end up causing you a financial hardship instead of a windfall. A simple check of your existing insurance policies will tell you whether or not you need added coverage. Check with your insurance professional to see if that’s the case.