What Coverage do I Need if I Rent Out a Room in my Home?

Renting out a room in your home can benefit you in many ways. If you have an extra room in your house that you never even use, renting out that room can generate you some extra cash. If you have fallen onto a lean period financially then renting out a room in your house could give you some needed monthly income. Renting out a room in your home can also help ease the costs of your mortgage payments. Whatever your reasons might be for renting out a room in your home, there are many financial benefits to consider about having someone rent from you.

Necessities for Landlord Insurance Coverage

Renting a room out to a tenant makes you a landlord, even when you are simply renting out a spare bedroom in a single-family home. As a landlord, you will need to take precautions for things that could arise from having a new and unfamiliar person inhabiting a portion of your property. In all likelihood, you will be renting out to someone that you hardly even know. You will be renting out to this person in the good faith that he or she will be a safe, responsible and well-adjusted housekeeper who honors their rent.

Nothing in life is entirely certain, however, and you can never really know whether the person that you rent to will ultimately be a desirable tenant. There are many problems that could arise in your relationship with the tenant, but these are problems that many landlords face from time to time. You might have a deadbeat tenant who simply doesn't pay their rent in a timely manner, if at all. Maybe he or she will have hidden vices, or associate with dangerous people whom they might invite into your home. Perhaps the tenant will turn out to be a horribly clumsy person with a habit for breaking things around the house.

As a landlord you will need special cheap type of homeowners coverage, because a standard homeowners policy will not protect you from damages that a tenant might cause. Most homeowners policies are defined to cover owner-occupied, single-family homes, but a home no longer meets that definition when it's being rented out to a tenant. Homeowners insurance will not cover the medical expenses of a tenant who suffers a burn from your stove or a fall from your stairway. Furthermore, renters are usually perceived as risky by homeowners insurance associations because renters are less likely than owners to take good care of a property.

Benefits of Landlord/Renter Coverage

For all these reasons and more, you will want to get landlord insurance coverage whenever you rent a room out in your home. Landlord insurance coverage will typically cost 15 to 20 percent more than standard homeowners insurance, but the added security from such a policy will be worth it. Landlord policies will cover your house, possessions and any additional structures to your property, such as sheds and swimming pools. Landlord coverage will also give you protection in the event of lost income from unpaid rent, as well as liability protection in cases of rental injury or lawsuit.

In order for a renter to cover their own liability, most landlords want their tenants to purchase renters coverage insurance. A renters insurance policy will cover the renter's personal belongings in the event of fire, theft or damage to your home. When you open your home to tenants, a standardized form of security is essential. Landlord and renters coverage policies can safeguard your interests when renting out portions of your home.

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