Does Homeowners Insurance Cover Renters Damage

Q&A Renters: Does Homeowners Insurance Cover Rent Damage?

(Find out if you're protected)

Table of Contents

Does homeowners insurance cover rental damages?
Does my space qualify as a rental?
What is a landlord insurance policy?
Can I require that my tenants hold a renters insurance policy?

Does homeowners insurance cover rental damages?

I'm thinking about renting out my home on Airbnb or through another website. I'm a bit concerned about my insurance coverage should something happen while a tenant is in the home instead of me. 

Will my homeowners policy keep me covered when I rent out my home, or do I need to purchase another policy?

This is a loaded topic, and there's no straightforward way to answer it. There are several factors at play when determining whether your homeowners policy will extend coverage to tenant damage. However, there are two factors that are more important than the others:

  • Length of rental: If you live in your home full-time but periodically rent it out just once or twice a year, your homeowners policy may provide some protection. This protection may be limited to cover only certain risks, say a fire or some sort of theft, but some coverage is better than none at all. If you rent out your property with any sort of regularity, a homeowners policy won't likely provide coverage.
  • Scope of rental: There's a difference with homeowners coverage depending on the scope of the rental. If you live in the home but rent out just one bedroom on a short-term basis, your homeowners coverage is generally sufficient. Things could get complicated if there are several tenants sharing that room or if they stay for a significant period of time. 

Homeowners insurance coverage for a tenant is a big gray area in the insurance world. As such, it makes a lot of sense to speak with your independent insurance agent to ensure that you have the proper policies in place depending on your unique rental scenario.

Does my space qualify as a rental?

If you rent out your home you may need different insurance coverage depending on whether what you're doing qualifies your home as a rental. As I briefly mentioned above, short-term arrangements may not mean that your situation is fully considered "renting." 

If your situation doesn't qualify as a rental, that stops this whole debate of whether homeowners insurance is sufficient for rental damages before it even starts. 

The issue with determining whether your rented space is a "rental" is that every insurance company has different rules about what qualifies as a rental. Some of the factors an insurance company might consider include:

  • Whether the tenant is related to you
  • Whether there is a separate entrance to the rental portion of the home
  • Whether the rental portion of the property is connected to the main residence

Depending on how all of this stacks up, you may have a qualified rental property or you may not. If you're confused about how all of the factors work together, you can speak to your independent insurance agent for a better idea of what will happen in your scenario.

What is a landlord insurance policy?

A landlord insurance policy is the type of policy you'll need to purchase if your property qualifies as a rental property. Landlord insurance is similar to homeowners insurance in that it typically covers the building along with other structures on the property. 

The policy will pay out when there's damage from a covered loss which can be anything from a fire to wind, hail, or lightning. The real difference is that you cannot purchase homeowners insurance if you don't live in the home and it's just being used as a rental. 

Otherwise, the property coverage is very similar in the two policies.

The biggest difference with a landlord insurance policy vs. a homeowners policy is with personal property coverage. Homeowners insurance covers personal belongings such as furniture, clothing, and electronics. 

In contrast, landlord insurance covers items used to service the rental property. By this, I'm talking about equipment such as a lawn mower or snowblower. If you leave personal belongings in the rental property, they won't be covered. 

If you're still unclear on the difference between a homeowners and landlord policy, talk to your independent insurance agent for more information.

Can I require that my tenants hold renters insurance policies?

Renters insurance isn't legally required in any states, but you can require renters to purchase coverage as part of their contract. A lot of properties do this because it's in the best interest of the renters. 

After all, a landlord policy protects the primary residence and structures on the property from damage, but it doesn't cover personal property or liability. If renters want that covered, they have to pay extra. This is the beauty of required renters insurance — it's for the benefit of your tenants. 

If you're trying to decide whether you should require that tenants hold renters insurance, your independent insurance agent is the best resource for the job.

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