These days it’s easier than ever to rent out part of your home or even your entire home. Online apps make space in your home a commodity that’s easily rented as needed. Long term tenants are also more readily available through online platforms. There’s an opportunity to make some extra money – but are you properly insured?
Renting your house
Let’s start with a more traditional approach to renting space: becoming a landlord with an annual tenant. Renting out an entire home is different than just renting out a room or renting your house out for a weekend. Many families become “real estate investors” completely by accident, such as when a family member passes away and leaves the home to children who already have homes. A standard home insurance policy is intended to provide coverage for a home that is occupied by its owner. If the house is either vacant or is being used as a rental property, you’ll want to reach out to your broker to discuss your coverage options. Homes that are rented out to long term tenants need a landlord policy to provide proper protection; a standard home insurance policy may not provide the coverage you need in many situations.
Renting a room
Insurers may view room rentals as “business activity”, which isn’t covered by a standard personal home insurance policy. Some policies prohibit rental activity (which can affect your coverage), while others may require a special endorsement or that you notify your insurer before renting a space for a limited duration. Ask your broker about your coverage before you accept a boarder.
Air BnB or vacation rentals
Whether you own a condo in a resort area, a rustic cabin in the woods, or a single-family home near a metro area, if you’re renting out space for short-term use, you’ll want a special type of policy. A landlord policy is intended for use with long term tenants. A home insurance policy is intended for your personal use and requires that you are present. A vacation rental policy is intended for short-term tenants and this is the type of policy you’ll need.
Discuss your intended use of the space (or the entire home) with your broker before you sign the dotted line on a lease or rental agreement. There may be some important considerations that affect your coverage. Renting out space can be a great way earn to some extra money, but you’ll want to be sure that your risks are well-covered.