Real Umbrella · Blog
Renting Out Your House? Check Your Homeowners Policy
Licensed California agency · CDI license #6020329
You got a job in another city, or bought a bigger place, or moved in with your partner. Selling the old house didn't make sense, so you rented it out. You found a tenant, set up the rent payments, maybe called a property manager.
Most people skip one call: the one to their insurance company.
If the old house is still on a homeowners policy, there's a good chance it isn't really covered anymore.
Why your homeowners policy stops fitting
A homeowners policy is written for a house you live in. The standard form most insurers build on, the ISO HO-3, defines the covered home as "the one-family dwelling where you reside." Once you move out, the house you're insuring may no longer be that home.
The one-family dwelling where you reside.
The same form also carves rentals out in a few specific places:
- It doesn't cover other structures "rented or held for rental" to someone who isn't a tenant of the main house.
- It excludes liability "arising out of" a business run from the property, and renting out a whole house can count.
- It doesn't cover your tenants' belongings, which is normal. That's what their renters insurance is for.
Every insurer writes its own version, so your policy's wording may differ. But the direction is the same almost everywhere: homeowners insurance assumes you live there.
How it goes wrong
Say you moved to Sacramento two years ago and rent your old Concord house to a family. One evening a pan fire gets out of hand in the kitchen. Cabinets, ceiling, smoke through the whole first floor.
You file a claim on the homeowners policy you never changed. The adjuster's first questions: Who lives there? Since when? Do you collect rent?
Now the insurer can argue the house wasn't your residence, so it isn't the home the policy covers. It may deny the claim. It may also cancel the policy, because the risk it priced isn't the risk it had.
And if the tenants' guest slips on the back steps and sues you instead, you may find the same policy won't defend you either.
What a landlord policy covers instead
The policy built for this is called a landlord policy, or a dwelling policy. You'll often see it labeled DP-3. It typically covers:
- The building itself, against fire, water from a burst pipe, wind and other covered damage.
- Other structures on the lot, like a detached garage or fence.
- Liability, if someone is hurt on the property and blames you. Check that the policy you're quoted includes it, since some dwelling policies treat it as an add-on.
- Lost rent while the place is being repaired after a covered loss. This is the one most accidental landlords don't know they need.
It doesn't cover your tenants' furniture or clothes. Ask them to carry renters insurance; many leases require it.
Price depends on the building, the location and the coverage, so the only reliable number is a quote on your address.
The gray areas
- Renting a room while you live there. The standard homeowners form allows renting part of the home you live in, within limits. Tell your insurer anyway.
- Renting out an ADU. If you live in the main house and rent a detached ADU, the standard form doesn't cover "other structures" rented to someone who isn't a tenant of the main house. That backyard unit may need its own coverage or an endorsement.
- Short-term rentals. Airbnb-style rentals are their own category. Many homeowners policies exclude them or need an add-on.
- Between tenants. Homeowners policies generally don't cover some losses once a house has been vacant 60 days or more. Landlord policies have vacancy limits too, so read yours.
What to do now
- Call your insurer and say you've moved out and rented the house. Don't wait for a claim to come up.
- Switch to a landlord policy before the homeowners one ends, so there's no gap. If you have a mortgage, your lender will require continuous coverage.
- Check for lost-rent coverage and liability on the new policy.
- Ask your tenants for proof of renters insurance.
Real Umbrella insures 1–4 unit rentals in California, including houses their owners used to live in. If you want to see what a landlord policy would cost for yours, get an estimate. It's online and takes a few minutes.