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gaps in homeowners insurance

The Liability Side of Renting Part of Your Home

The main reason people rent out part of their home, such as a room or an entire floor, is the need for extra income. These landlords are retirees, single parents, people with disabilities who can’t work, and people who use the income to offset mortgage payments. If the homeowner lives in an area considered desirable, then rents will generally increase each year, which makes renting yet more lucrative. However, with gaps in homeowners insurance, you may want to consider a personal liability insurance policy to protect your assets.

If the homeowner doesn’t mind lots of short-term tenants, she or he can engage in home-sharing. This involves renting a room or rooms to people visiting the area. They could be vacationers, business travelers, or anyone inclined to travel. Online platforms such as VRBO, Airbnb, and HomeAway do the hard work of finding and vetting tenants. Travelers wanting a change from the hotel experience and cheaper accommodations also benefit.

As attractive as renting your home seems, there are downsides. An important one is the liability risks of being a landlord. If you intend to rent out part of your home as an ongoing business activity, you will need landlord insurance. If this is an occasional activity, especially if you’re engaged in home-sharing where getting some quick cash with short-term tenants is easy, then paying ongoing landlord insurance premiums is less viable. Can you rely on your homeowners liability coverage? Unfortunately, most insurers will regard home-sharing as a business activity and will exclude it from their coverage.

This leaves you exposed to lawsuits arising from failing to provide safe housing in good repair. Maintenance issues you’re normally relaxed about can potentially expose you to litigation. For example, you will have to keep porch steps, sidewalks, and your driveway clear of snow and ice.

Something as simple as a burnt out porch light combined with a patch of frozen water on the porch can cause an injury and lawsuit. A small plumbing leak can within a few days, start a mold infestation and make the tenant sick or have a severe allergy attack. These are just two of many plausible scenarios.

However, this need not stop you from enjoying the benefits of home-sharing or occasionally renting out a room. You need only get specialized personal liability coverage. Protect your assets, future earnings, and your financial security.


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