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Do I need to tell my homeowners insurance company before renting out my home?

Last Updated: 03/13/2012 10:30 AM

If you decide to rent out your house, it changes the risks associated with insuring the house. Because of those changes, it is important that you let the insurance company know that you plan to rent out the home in order to secure the right types of coverage. You will also need to notify your mortgage lender, as a rental property changes the risks associated with the mortgage change just as it does with your homeowners insurance needs.

A standard homeowners policy includes coverages you do not need for a rental property. One of the most obvious examples is that personal property coverage in a home insurance policy does not cover tenant property. You are still responsible for the home and structures, including damages to the home or liability for damages caused by the home or other items on your property. The tenant, though, is responsible for securing their own personal property, usually through a renters insurance policy.

The good news is that when you rent out property, the cost of insuring the property is lower. Instead of carrying a full homeowners policy, you are only required to have landlord insurance to cover the liability and structures. Basically, you are responsible for maintaining the property, but the tenant is responsible for anything that belongs to them, including liability damages or injuries that are not directly the fault of the home or other items on your property, such as a tree falling on someone's car.

Remember, though, that if you have a mortgage on the property you are renting, your mortgage company must be notified of your intent to lease the property. And because the mortgage company has an insurable interest in the home, it is possible that your mortgage company will still require you to carry complete homeowners insurance, in spite of the fact that you are not a resident on the insured property.

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