Have you ever considered renting your home to someone? Airbnb and Vrbo rentals have become an increasingly popular way to gain additional income. But what is the best type of insurance to have for home rentals? To ensure your additional income doesn’t become one big additional headache, you should research the type of insurance you need and the best way to do so is by consulting with your insurance agent. We can offer insight into a few different options being used for this type of exposure:
Long-Term Rental– If you have a secondary home that you are considering renting, you will need to decide if you want to make it a long-term rental. With a long-term rental, the tenant typically agrees to a 6-month to 1-year contract/lease. If that home was never rented to anyone previously, you will most likely find it insured as a secondary home on a homeowner’s policy. In this circumstance, you should change the policy from a homeowner’s policy to a dwelling fire/ rental property policy. Dwelling fire policies will cover the dwelling/structure, as well as offer liability and loss of rent.
Seasonal Rentals/Short-Term Rentals (Airbnb, Vrbo, Flipkey, etc.) – This type of rental is often referred to as a vacation property. Whether you prefer to be skiing the mountains or soaking up the sun on the beach, if you are renting your home out, for short-term periods, you need to make sure your insurance covers that type of occupancy. Often this type of rental can be endorsed onto a homeowner’s policy versus having to buy a separate policy.
If you list your property through Airbnb, Vrbo, or Flipkey, they do offer some insurance protection, however, it is not adequate to be your only coverage in most cases. These policies typically provide liability coverage, which would help in the event of a slip and fall at your property, but it does not cover damage to your personal belongings or damage to the home itself.
Home-sharing– Home-sharing is when the actual homeowner resides at the property but rents a portion of the home to a tenant or a paying guest i.e.: a bedroom or a basement. Similar to short-term rentals, home-sharing can often be covered by an endorsement on your current homeowner’s policy. However, not all insurance companies will offer this endorsement. Consulting your agent is needed here if you are considering bringing a tenant into your home, to discuss your options.
Some people are feeling the pain of our economy and are trying to find ways to offset their costs, whether it is sharing their home and utility bills, or renting out their vacation home for 4-6 weeks a year to help cover their mortgage. Whatever the reason, make sure to contact your agent for guidance, don’t wait until something happens to find out you are not covered.
About the Author
Kellie Eschbach
Personal Lines Manager
HMK Insurance, an Alera Group Company
Contact Information:
- keschbach@hmk-ins.com
- (610) 868-8507
