Why Occupancy Matters in Insurance
Whether you're renting out your former home, in the midst of a remodel before selling, or transitioning between tenants, changes in your property’s occupancy status can have significant implications for your insurance coverage. It’s essential to inform your insurance agent whenever occupancy shifts to ensure you have the right protection.
Why Is Occupancy Important?
Insurance policies are designed with specific occupancy in mind. Coverage can change drastically depending on whether a property is owner-occupied, rented out, or vacant. For example, insurance carriers see more claims on tenant-occupied properties, which is why rental activities are often excluded from standard homeowners policies. Similarly, vacant homes face higher risks for vandalism, liability, and fire. Even an intruder injured while breaking in could file a claim or, in some cases, sue.
Homeowners Insurance
If you live in your home and your name is on the deed, you qualify for homeowners insurance. Here’s how some of the coverages differ from landlord insurance:
Personal Property: Homeowners insurance protects your belongings. In contrast, a landlord policy will only cover items that service the rental property. If you rent out a fully furnished home, you’ll need to inform your agent to ensure coverage extends to those contents.
Liability Coverage: Homeowners insurance typically covers personal liability, even if an accident happens off your property. Landlord liability, however, is usually limited to incidents that occur on the rental premises.
Landlord or Rental Property Insurance
If you’re renting your property to tenants or allowing someone who isn’t listed on the deed to live there, you need landlord insurance. It’s also crucial to specify the type of rental arrangement—whether it’s an annual lease or a short-term rental through platforms like Airbnb, VRBO, or HomeAway—as some landlord policies exclude coverage for short-term rentals.
Loss of Rents: Landlord insurance can compensate you for lost rental income if a covered event damages your property and it becomes uninhabitable.
Cost: Depending on factors such as the property’s location and condition, landlord insurance can cost about the same as a homeowners policy.
Tenant Belongings: Landlord insurance only covers the landlord’s belongings that come with the lease, such as appliances. Tenants should carry their own renters insurance to cover their personal property.
Vacant Home Insurance
If your property is vacant due to renovations, being between tenants for an extended period of time, or listing it for sale, you’ll need vacant home insurance. A standard homeowners policy doesn’t cover vacant properties, and the insurance carrier may cancel, reduce coverage, or deny claims if the property is left unoccupied for an extended period.
Flexible Terms: Vacant home policies can be issued for 3, 6, or 12 months, depending on how long you expect the property to remain empty.
Higher Costs: These policies tend to be more expensive, but they are generally temporary and tailored for shorter durations.
Seasonal or Vacation Home Insurance
If you own a vacation home or a weekend getaway property, you’ll need a seasonal or vacation home insurance policy. Vacation homes are often older and may have unique risks (like a deteriorating porch or aging infrastructure), so coverage can be more customizable than a typical home policy.
Customizable Coverage: You can choose to cover only the essentials, like the structure, and leave out personal property coverage for furniture and belongings to reduce costs.
Rental Considerations: If you rent out your vacation home while you're not using it, notify your insurance agent. It may be more appropriate to insure the property under a landlord or rental policy.
Protecting Your Property with the Right Coverage
Your property’s occupancy status directly affects what your insurance policy covers. Whether you’re a homeowner, landlord, or managing a vacant property, ensuring you have the correct coverage can protect you from potential financial losses. Our insurance advisors are here to help you find the right policy that fits your specific needs and situation.