What to Know About Home Insurance If You Rent Out Your House

When renting out your home, you may need a specialized type of home insurance policy, which likely has a higher price tag.

Erin Gobler
Written byErin Gobler
Erin Gobler
Erin Gobler
  • Más de 5 años de experiencia en redacción financiera 

  • Certificado de planificación financiera por la Universidad de Boston

Erin es escritora y periodista especializada en finanzas personales. Sus artículos exploran inversiones, tarjetas de crédito, hipotecas, seguros y mucho más.

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Sara Getman
Edited bySara Getman
Sara Getman
Sara GetmanAssociate Editor

Sara Getman is an Associate Editor at Insurify and has been with the company since 2022. Prior to joining Insurify, Sara completed her undergraduate degree in English Literature at Simmons University in Boston. At Simmons, she was the Editor-in-Chief for Sidelines Magazine (a literary and art publication), and wrote creative non-fiction.

Outside of work, Sara is an avid reader, and loves rock climbing, yoga, and crocheting.

Updated December 1, 2024

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Renting out your home can be an excellent way to make money, whether it’s on a short-term or long-term basis. But it’s important to consider how that might affect your insurance and whether you’ll need additional coverage.

Depending on the type of rental, you could end up paying higher premiums or needing additional coverage when renting out your home.

If you’re considering turning your home into a rental, keep reading to learn how it affects home insurance premiums, the type of home insurance you’ll need, and more.

How renting out your home affects insurance premiums

If you’re renting out your home, it’s important to consider how that may affect your home insurance premiums. If you own either a short-term rental that you rent out regularly or a long-term rental, you’re likely to see an effect on your insurance premiums.

The cost of insurance for a long-term rental is generally about 25% higher than a standard homeowners insurance policy. Your premiums are likely to increase for a few different reasons:[1]

  • New risk factors: When you bring tenants into your home, you open yourself up to new risk factors, including an increased risk of property damage. After all, if you run a temporary rental with new renters visiting every week, you can’t necessarily trust they’ll all take as good care of your space as you would.

  • Policy adjustments: Depending on your rental situation, you may have to get an entirely new type of insurance. For example, rentals generally require landlord insurance rather than traditional homeowners insurance. Even if you can use your existing insurance coverage, you may need to add an endorsement to your policy.

  • Liability considerations: Renting out your home opens you up to plenty of liability risks, just like owning any business does. For example, if a tenant sustains an injury in your home, you’ll be on the hook for it. You may need increased liability insurance to account for the increased risk.

If you own a short-term rental that you rent out on rare occasions, your insurance premiums may not change at all, but that won’t be the case for most rental situations.

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Does homeowners insurance cover rental properties?

No matter what type of rental property you own, it’s important you have insurance to cover it. In some cases, your existing home insurance policy may be sufficient. But for certain types of rental relationships, you may need to add endorsements to your current policy or acquire a different type of policy altogether.

After all, in addition to exposing your home to more risks, making money from your home may also constitute a business, which comes with different insurance requirements.

A key factor that affects the insurance requirements for your rental home is whether it’s a short-term or long-term rental.

Short-term rentals

If you’re planning to rent out your home or one room temporarily, your current homeowners insurance policy may cover it.

In some cases, you may simply have to notify your insurer that you plan to rent out your home. In other cases, your insurer may require you to purchase an endorsement to add to your policy to ensure you have coverage for any damages during the rental period.

Keep in mind that this information likely only applies if you’re renting out your property as a one-off, such as if there’s a large event in your city for the weekend and you decide to rent out your primary residence. These guidelines likely won’t apply if you have a second home or investment property that you rent out frequently.

Good to Know

If you have a property you rent out frequently through sites like Airbnb or VRBO, you’re running a business. In that case, you’ll likely need a business insurance policy, such as short-term rental insurance.

No matter what the circumstances of your short-term rental, it’s important to contact your homeowners insurance company to find out whether you need additional coverage.

Long-term rentals

Your standard homeowners insurance policy won’t cover your long-term rental. Homeowners insurance specifically protects homeowners from loss relating to their home and personal belongings. The insurance needs are very different if you rent out the property to a tenant on a standard year-long lease or a similar contract.

If you own a long-term rental, you’ll likely need to purchase a landlord insurance policy.[1] 

In addition to your own insurance, your tenant may also want to purchase renters insurance. Unlike a homeowners insurance policy, which covers all your personal property within the home, landlord insurance won’t protect your tenant’s belongings. They’ll need a separate renters insurance policy to cover their personal items in case of damage.

Specialized coverage for rental properties

One thing to prepare yourself for if you want to rent out your home is the additional insurance requirements you may be subject to. The type of insurance you’ll need depends on the type of rental you have.

Here are some specialized insurance coverages you may need:

  • illustration card https://a.storyblok.com/f/162273/150x150/ef76aca096/house-rental-96x96-green_017-maintenance.svg

    Landlord insurance

    Also known as rental dwelling insurance, landlord insurance covers long-term rental properties. It covers the property itself and your belongings within it (though not your tenants’ belongings), including furnishings, appliances, and items you use to service the property. Landlord policies also include liability insurance and coverage for your lost rental income in case of a covered claim.[2]

  • illustration card https://a.storyblok.com/f/162273/150x150/ee0f1a4393/law-and-justice-96x96-yellow_027-dossier.svg

    Endorsement to existing coverage

    If you rent out your home or a spare room infrequently, you may only need an endorsement on your current homeowners insurance policy. These offer additional liability protection and coverage against damage or theft from a renter. But they may be limited to a certain number of days per year.[3]

  • illustration card https://a.storyblok.com/f/162273/150x150/36e0a8581b/house-rental-96x96-blue_050-budget.svg

    Short-term rental insurance

    If you own a short-term rental, you may consider a stand-alone short-term rental insurance policy. These provide liability coverage and coverage for your property and your belongings within it. They may even cover your lost revenue in case of a covered insurance claim.[4]

Do you need to let your insurer know you plan to rent out your home?

If you decide to rent out your home — or even just a portion of it — you should definitely let your home insurer know.

First, some rental agreements may require a special type of insurance policy, such as landlord insurance or short-term rental insurance. Even if you don’t need an entirely new policy, your insurer may either require an endorsement on your policy when you rent it out or require advance notice.

Keep in mind that the consequences of keeping this information from your insurer could be dire. If there’s an incident and you don’t have the appropriate type of insurance, you could end up paying for it out of pocket. That could be the case for anything from minor damage to a total loss.

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Ways to decrease risks when you rent out your home

Renting out your home puts you at a higher risk, but you can do a few things to decrease that risk without missing out on the rental income.

  • Implement safety features. Having safety features in your home — including smoke detectors, sprinklers, and security systems — can reduce the risk of damage to your home. As an added bonus, they may also help you get a discount on your insurance.

  • Screen your tenants. One of the best ways to reduce damage to your home is to screen your tenants, including a background check and reaching out to their previous landlords.

  • Complete lease agreements. Anytime you’re renting out your home, it’s important to have a contract in place. A lease agreement protects both you and your tenant.

  • Get the right coverage. It’s important to have the right insurance coverage in place before renting out your home, whether that’s landlord insurance, short-term rental insurance, or an endorsement. Failure to do so could result in your insurance company denying any claims.

  • Know your state and local laws. Each state and local government has laws regulating the landlord-tenant relationship. If you don’t properly research these laws, it could cost you more money in the future.

Renting out your home FAQs

Before you rent out your home, read the answers to these frequently asked questions to learn more about the type of insurance coverage you’ll need.

  • Is landlord insurance the same as homeowners insurance?

    No. Landlord insurance and homeowners insurance have some similarities, but they’re ultimately different policies. Both offer dwelling and liability protection. But homeowners insurance protects all your personal belongings as well. Landlord insurance, on the other hand, offers limited coverage for personal effects but may cover lost rental income.

  • What is the difference between home and rental insurance?

    Home insurance covers your home, its attached structures, and your personal belongings within the home. It also offers liability protection and loss of use coverage in case you can’t stay in your home after a covered loss. Renters insurance, on the other hand, covers your personal belongings and liability but doesn’t cover the structure itself.

  • What is the difference between a dwelling policy and a homeowners policy?

    Dwelling insurance is a type of coverage included under a standard homeowners insurance policy as well as landlord insurance. It’s not a stand-alone policy but rather the part of your policy that covers the physical structure of your home.

  • Do you need to notify your insurer if you rent your house to tenants?

    Yes. You should notify your insurance company if you plan to rent out your house to tenants. Some companies may require additional endorsements or coverage types. If you fail to notify your insurance company, you could end up with an expensive claim the company won’t cover.

Sources

  1. III. "Coverage for renting out your home."
  2. Libertymutual.com. "Landlord Insurance."
  3. American Family Insurance. "Short-Term Rental Insurance."
  4. Proper Insurance. "WHAT MAKES A PROPER POLICY?."
Erin Gobler
Erin Gobler

Erin Gobler is a personal finance writer and journalist based in Madison, Wisconsin. With more than five years of experience, Erin has covered topics such as investing, credit cards, mortgages, insurance, and more. Her work has been featured in major publications like Business Insider, Fox Business, and Time. Erin received her bachelor’s degree from the University of Wisconsin-Oshkosh in 2013, studying journalism and political science. She also received a certificate of financial planning from Boston University in 2022.

Sara Getman
Edited bySara GetmanAssociate Editor
Sara Getman
Sara GetmanAssociate Editor

Sara Getman is an Associate Editor at Insurify and has been with the company since 2022. Prior to joining Insurify, Sara completed her undergraduate degree in English Literature at Simmons University in Boston. At Simmons, she was the Editor-in-Chief for Sidelines Magazine (a literary and art publication), and wrote creative non-fiction.

Outside of work, Sara is an avid reader, and loves rock climbing, yoga, and crocheting.

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