Whether you need the extra income or you just want to help a friend out, you may have decided to rent a room out to someone. Renting a room out to someone can change your insurance needs, as there is now an additional person in your household, and they have their own possessions. Here’s what you need to know about your insurance coverage.
You’re Still Covered by Homeowner’s Insurance
You may have heard that landlords often need to have a special type of landlord insurance. While this is true, you’re still a homeowner, and you’re still living in your home. If you’re just renting a room to another person without moving out, you’re still going to be covered by your homeowner’s insurance policy. You may just need to make some changes to it.
Don’t worry about having to cancel your homeowner’s insurance or that your coverage may be rendered invalid. Most homeowner’s insurance companies are more than happy to work with you if you’re renting a room. They just need to know in advance.
If you don’t notify your homeowner’s insurance company of new residents and a growing household, you may find certain things invalidated when you claim them on your insurance policy. Updating your insurance regularly is the safest way to ensure that you’re always covered.
You May Need to Limit the Amount of Tenants
You can have only a certain number of tenants without adjusting your premiums. If your household goes from one person to three people, you could find yourself paying more in insurance. Likewise, if it goes from three to eight, your insurance company may decline to renew your policy. This is especially true if the amount of people in your household exceeds the maximum number allowed by your county.
If you have quite a few tenants (three or more), you may be running a boarding house more than a home. Your insurance company may want you to consider landlord insurance at that time.
You May Want to Increase Your Coverage
You don’t need to personally cover your renter’s property, but you may want to increase your liability coverage regardless. If your tenant gets injured or has their property damaged (and you are found liable), your homeowner’s insurance coverage will kick in.
Your current coverage limits will have been calculated solely based on your original household and won’t factor in the potential risks associated with someone else living with you. Therefore, you should recalculate all of your coverage amounts. Your premiums will go up, but your risk will go down.
You Should Encourage Your Tenant to Get Renter’s Insurance
Renter’s insurance will cover your tenant in the event that their personal possessions are stolen or damaged. It can also cover your tenant for living expenses should you need to do repairs on your home or should a disaster strike. Having your tenant covered is a good idea in general, as it means they’ll be less likely to be financially devastated by an accident or event.
Keep in mind that if your actions damage your tenant’s property, it could be considered under your insurance rather than theirs. As an example, your homeowner’s insurance would kick in if your roof leaked and damaged your tenant’s property, especially if you were aware that the roof had been leaking.
Your Insurance Isn’t Going to Cover Room Shares
Room rental services such as Airbnb are generally not covered by homeowner’s insurance policies because they are considered to be commercial or business activities. If you’re going to be renting your room out to people through an app, damages related to this are not likely to be covered. You would need a special commercial insurance policy for this.
Not sure what changes you need to make? Contacting an insurance company is often the best bet. The experts at Lanham Agency can go over your coverage and give you guidance. Call us today.