When it comes to long-term and short-term rentals, combining business income with personal property protection can be tricky. Landlord policies cover long-term rentals, but what constitutes a long-term rental and when does a rental require a bed and breakfast policy? The answer varies depending upon your carrier and the length of the rental.
When you own multiple properties, including your personal residence, it can be helpful to hire a local insurance agent who can tailor your insurance efficiently to your specific situation. Below are a few key tips, outlining the basics. If you would like a quote for your specific situation. Please contact firstname.lastname@example.org
- Renting your house out while you live there consists of business activity, which historically was not covered under your homeowners policy. Generally short term rentals required a bed and breakfast or a hotel policy. Insurance companies are catching up to the gig economy and some now allow you to add an endorsement to your homeowners policy for coverage.
- Short term rentals: some homeowners policies allow for short-term rentals throughout the year. The key here is to talk to your agent as some companies require only notification, while others will want a separate endorsement for each short-term rental period.
- Property that is leased with long term contracts, 1 year or more, requires a landlord policy. These are traditional rentals policies that work similar to a homeowners policy, but have minimal protection to the content in the dwelling – the content would need to be covered by a rental insurance policy.
In addition, it’s always good to consider policies such as an umbrella policy for additional protection from a liability. Disability and life insurance may also help in specific cases. For example, a life policy may help in a situation where an owner dies and cash flow is needed to maintain, rather than sell the property.
If you own a property that is used as a rental, take some time to review your policy this week. If you have questions on what is appropriate coverage or if you think you are not getting value for what you are paying, we can help.
Written by: Patti ORourke for Welch Financial Planning, LLC