One of the most common — and costly — mistakes rental owners make is keeping a homeowners policy on a house they've started renting out. It often happens innocently: an owner moves, rents the old house to a friend or family member, and never calls their agent. Then a fire or a tenant injury reveals the problem.
Why homeowners policies don't fit rentals
Homeowners policies are written for owner-occupied homes. Most limit or exclude coverage when the home is rented to others, because the risk is different: tenants control the property day to day, maintenance may be deferred, and liability exposure changes. A claim on a rental insured under a homeowners policy can be denied.
What a landlord or dwelling policy covers
- The building itself, at replacement cost or actual cash value depending on the form.
- Other structures such as detached garages and sheds.
- Your personal property used to maintain or furnish the rental, such as appliances.
- Loss of rents while the property is uninhabitable after a covered loss.
- Premises liability for injuries caused by the property's condition.
What it doesn't cover
A landlord policy doesn't cover your tenants' belongings or their liability. That's what renters insurance is for.
Renting to family
Even if you rent to a relative or charge reduced rent, it's usually still a rental. Tell your agent.
Short-term rentals are different
Many landlord policies exclude short-term or nightly rentals. If you rent through Airbnb or VRBO, you need coverage designed for that.
Make the call
If you've moved out and rented your former home, call your agent today and make sure it's on the right policy.
The right policy is the difference between a paid claim and a denied one.
This material is for general information only. Coverage depends on the actual policy language, and availability varies by carrier.