Do I Need to Change My Homeowners Insurance If I Rent Out My House?

In short, renting out your property means you need a landlord insurance policy – or DP3 policy – to make sure you’re properly protected. That’s true for short-term rentals, too.

Renting out your property means you need a landlord insurance policy – or DP3 policy – to make sure you’re properly protected. That’s true for short-term rentals, too.

Why You Need Different Coverage If You Rent Your House

As soon as you sign the lease with a tenant, you’ll need to change your homeowners insurance to landlord insurance.

Because you’re not living at the property, your coverage needs change. Namely, you don’t want to pay to cover all your tenant’s belongings in the home, and you’ll want to protect your rental income if there’s a loss.

That’s the key difference between landlord insurance and homeowners insurance. A homeowners policy will cover all personal belongings and additional living expenses if a covered claim keeps you from inhabiting the home.

As you can imagine, that coverage would certainly benefit your tenant, but it wouldn’t do you much good as the property owner. So landlord coverage handles it a little differently: it can cover appliances and permanent fixtures in the property, but not your tenant’s personal belongings inside the home. And if a covered claim keeps you from renting out the property, it includes fair rental value coverage to protect your lost income.

Learn more about the difference between DP3 and HO3 policies.

Does Homeowners Insurance Cover Rental Properties?

In most cases, homeowners insurance doesn’t cover rental situations. The logic is simple: your property becomes a business asset when you rent it out, and that makes it a higher risk because tenants typically don’t care for a rented home the way a homeowner does.

That means if you have a standard HO3 policy on the property and you’re renting it out, you run the risk of not having your losses covered if you need to file a claim. That’s why it’s so important to make sure you have the right policy for how you’re using the home.

While other providers may add an endorsement to your policy to cover occasional rentals if the home is primarily your residence, it’s worth noting that isn’t the case with us. Our landlord policy is designed to cover both long-term and short-term rental situations, like Airbnb.

When Do You Need Landlord Insurance?

You need landlord insurance when:

  • You don’t reside at the property.
  • You rent the property out.
  • You use the property for short-term rentals like Airbnb, Vrbo, etc.

Be prepared to let your provider know how long you rent out the home, how much you rent it for, and how the property is used when it’s not being rented. Is it vacant, used as a vacation home, or will you live there? Remember, you want the right policy, not just a cheap one, especially if the cheap one doesn’t protect you.

Does Landlord Insurance Cover Personal Belongings?

In some cases, yes, landlord insurance can cover personal belongings. It won’t insure your tenants for their belongings in the house – they should have renters insurance for that.

But it’s common for rental properties to provide appliances like an oven, microwave, refrigerator, and washer and dryer with the property lease. Landlord insurance can cover those items against loss or damage. It’s worth noting that they won’t be covered for wear and tear or damage caused by the tenants.

How Much Does Landlord Insurance Cost?

Because landlord insurance and homeowners insurance offer similar coverage, they are priced similarly, too. However, landlord insurance considers the increased risk of having tenants watch over the property instead of a homeowner. As a result, a landlord policy may be slightly more than a homeowners policy for the same property.

So when you convert your home into a rental property, factor into your landlord budget the cost of insurance and estimate it as more than what you were paying.