If you decide to move to a new house and cannot sell your old one, you could rent out the old house to someone who needs a place to live. When you do this, you instantly become a landlord to your new tenants. If you do this, you will need to contact your home insurance company to let them know that you are renting the home. This will change your insurance needs for this home, and here are several things to know about this.
Why It Changes
Insurance companies base rates of home insurance on the fact that the homeowners live in their homes. When a homeowner moves out and rents the house to someone else, the insurance company views this very differently. In other words, a house that is owner-occupied has different insurance needs than a house that is being rented by a tenant. Because of this difference, you will need to get different insurance.
The main reason this occurs is that there are more risks with a home that has renters and not owners. For this reason, you will pay more for home insurance when you rent the house out than you were paying while living in the home, even though you will actually need less insurance. In fact, you may have to pay around 25% more for this coverage.
The Coverage You Will Need
The coverage you will need when renting out the house is different than when you lived there, and the main difference is that you will only need insurance for the structure of the house and not the contents. The person who moves into your house should get renter's insurance to cover the things they own. Because you still own the house, you will need coverage for the structure of it to protect it if anything happens.
Why You Should Get Rental Insurance
You might think that you should just keep the same policy on your home as you already have, simply because it provides more coverage and is less expensive; however, this is a bad idea. If something happens to this home and you file a claim on it, the insurance company could deny the claim if they find out you do not live there and that you are renting out the house. Keeping your current policy would be very risky for you.
If you have any questions about this subject or would like a quote for home insurance, contact a homeowner's insurance company today.
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