What Insurance You Need for Renting Out Your Home

April 24, 2023

If you are renting out a room in your house, renting your home while you are away, or renting on Air BnB or Vrbo, your home insurance will probably not cover you.

You will need short-term rental insurance or landlord insurance to protect your home and investment from the risks that come with renters.

Do I need special insurance if I am renting out my home under Air BnB or Vrbo?

Renting out your home on Air BnB or Vrbo can be a great way to make money, but it you need to be protected. This means that a basic home insurance policy will likely not cover it, and you will need short-term rental insurance.

What if I rent out my house when I travel?

If you rent your home out while you are travelling, you will probably need short-term rental insurance. Also known as home-share insurance, short-term rental insurance covers homeowners who rent out their residence or vacation property for short time periods, generally up to six months. If you are gone for six months or less, you will probably need short term rental insurance.

Short-term rental insurance

Your home insurance will likely not cover damage caused by renting your home out on a short-term basis. Short-term rental insurance is designed for this type of situation and covers:

Liability
Theft by tenants or guests
Accidental or deliberate damage caused by tenants or guests
Loss of income if your property is uninhabitable after being damaged by guests or tenants
The cost of changing locks and replacing keys
The cost of utilities if guests use too much

What about coverage provided by Air BnB or Vrbo?

Vrbo and Air BnB do provide coverage for homeowners, but there are limits. Air BnB’s coverage does not include intentional damage or injuries, damage caused by pets, and damage caused by acts of nature. Vrbo covers liability but not damage and you can ask for a damage deposit when renting through them. Because of these gaps in coverage, it is advisable to have your own short-term rental insurance.

What if I rent out a room in my house?

Renting out your spare bedroom seems like an easy way to earn some extra cash, but it can quickly cause problems if the wrong tenant moves in. Risks you take include theft, vandalism, and unpaid rent. Renting out a room in your home may not be covered by your home insurance, or it can increase your home insurance rate.

Ask your insurer what your home insurance currently covers; some insurers may allow one tenant but not more, for example. Ask how much your home insurance rate would increase and whether you can have a tenant or if you need a new home insurance policy.

Landlord insurance

Shorter stays can be covered through short-term rental insurance, but if you are renting out your whole home for an extended length of time, you may need landlord insurance. Landlord insurance generally costs 10-15% more than home insurance, and you may decide to add this cost to the rent you charge.

Tenant insurance

If you are renting a room in your home to a tenant, you can require them to purchase tenant insurance. This provides additional protection for you if they cause damage or are liable for an injury. It also covers your tenant’s additional living expenses if they need to move out while your home is being repaired following an insured loss.

Whether you are considering a roommate, renting your home on Air BnB or Vrbo, or renting your house while you are travelling, you must make sure to have the right coverage.