Things to Consider Before Renting Out Your Multi-Family Home
Multi family home purchases are on the rise, which means so is the need for landlord insurance. According to the Insurance Information Institute, renters are statistically more likely than homeowners to cause property damage that requires a claim. So whether you’re living on the property or off, using it as a second home or as an investment property—if you’re renting out any part of your home, you may need landlord insurance.
Here’s a quick guide on how to make sure your rental property is protected, both for you and for your tenants.
If you’re renting short-term, or the property is your primary residence.
Maybe you want to rent out a spare unit through Aribnb, or make a little extra cash renting out part of a coastal property during peak season. Whether or not you’re living on the property, if you’re planning to rent out all or part of the home for a short period of time (say a week or several weekends), the first step is to notify your insurance company. From there, there are two possible insurance scenarios:
- You can stay on your current home insurance policy. You can possibly stay on your current home insurance policy. Some companies will allow you a short-term rental on your current homeowners policy (as long as you’ve given them prior notice). Other insurance carriers may require an endorsement to your existing homeowners insurance policy in order to provide coverage. Other carriers will not pay for a claim related to a rental at all, so it is imperative you work with your agent on what is appropriate for your situation.
- You’ll need a business policy. Say you are planning to rent out a residence for short periods on a more regular basis—this would qualify as a business. Standard homeowners insurance policies would not provide coverage for business activities conducted in the home. To be properly covered you need to purchase a business policy—specifically either a hotel or bed and breakfast policy.
If you’re renting long-term, or the property is your second home.
Planning to lease all or part of your home to an individual or family for longer periods of time, say months to a year? You’ll likely need a landlord or rental dwelling policy with increased protections. Landlord insurance policies typically provide:
- Property insurance coverage for physical damage to the home caused by fire, lightning, wind, fail, ice, snow and other covered events.
- Personal property coverage for any personal property you leave on the property for maintenance or tenant use, such as appliances and yard equipment like lawn mowers.
- Liability coverage to cover legal fees and medical expenses if a tenant or their guest is injured on the property.
- Loss of rental income may also be covered for a specific period of time if you are unable to rent out the property due to repairs or rebuilding, if the damage is caused by a covered loss.
To protect your renters.
Remember, even if you and your financial interest in your rental property are covered through a landlord or homeowners insurance policy, your tenant’s personal possessions are not. Before signing a lease, it’s wise to require your tenant to purchase renters insurance and avoid future disputes arising from damage to their belongings.
How to get covered.
Before you rent out all or part of your property, it’s important to make sure you’re properly protected. Contact a local Bearingstar agent today to see what coverage may be available to you. We’re here to provide the best coverage for you and your renters, with a policy that meets your specific needs, however you’re choosing to use your property.
Call us at 877-801-7424 in Massachusetts, and 888-519-9996 in Connecticut.
Coverage for renting out your home. Insurance Information Institute (III).