Why does occupancy matter in insurance?

Maybe you're doing some light remodeling before listing your house on the market, or you started renting out your prior home and moved somewhere new. Whatever the case, when occupancy changes, it's important to inform your insurance agent to make sure your policy is offering the proper protection.

Each policy has specific wording in its contract about what's covered and what's not. One of the main components is occupancy.

Why does it matter?

Insurance carriers tend to experience more claims on tenant-occupied properties, so they set up wording to exclude rental activities on homeowners policies.

On vacant properties, acts of vandalism, liability, and fire are more common and very serious. Intruders could even break-in, get injured and file a claim, or worse, sue.

Homeowner’s insurance

To purchase homeowner's insurance, you must live in the home (and your name must be on the deed).

• Personal property – homeowners insurance covers your belongings, while a landlord policy will only cover items in the home used to service the rental property (or if renting out fully furnished, you need to inform your agent to get coverage for contents).

• Liability – homeowners insurance liability will typically will cover you whether the accident happens in your home or not. Landlord liability will be premises only.

Landlord or rental property insurance

If you are renting to tenants , or someone lives there who isn't on the deed, then you need landlord insurance. It's also important to specify whether it's an annual lease or short-term lease (i.e Airbnb, VRBO, HomeAway, etc.), as some landlord policies will even exclude short-term rentals.

• Loss of rents – landlord insurance provides loss of income if a covered loss occurs.

• The cost can be similar to a homeowners policy (depending on several different factors).

• The policy will cover the landlord's belongings that came with the lease only. It will not cover the tenant's belongings. We suggest that you require your tenants get their own renters insurance policy.

Vacant home insurance

You may be between tenants, undergoing renovations, or putting it on the market. The insurance requirements for vacant homes are different than a home policy. If insured as a home and the property is actually vacant, the carrier has the right to cancel mid-term, lower coverages, or deny a claim. 

• The policy can be written in a 3-month, 6-month, or 12-month term depending on your needs.

• The rate is more expensive, but do keep in mind that these are generally temporary policies and last a shorter amount of time.

Seasonal or vacation home insurance

If you have a lake house or a small weekend cottage, you'll need seasonal home insurance, or a vacation home insurance policy. Instead of a typical home policy, the vacation home might be a little older and passed down through generations. The porch might not be as sturdy or perky as before.

• You'll have more options with this type of policy to decide the coverage you want.

• To keep costs low, you may not want to cover all your furniture or belongings here.

• You wouldn't have additional living expenses here since it's a second home.

• If you're renting the home out while you're not there, you will want to notify your agent. It may be written best as a landlord or rental policy.

Our insurance advisors are here to help determine which coverage would work best for you.