Are You Covered if You Rent Out Your Home’s Basement?

When it comes to home insurance, today's homeowner needs to be careful about the types of activities taking place in the home to ensure comprehensive coverage is always available. One of the factors to consider is who is living in your home. If you are planning to rent out space in your home, you need to consider the changes that could occur with your home insurance policy. Do you need to make an adjustment to ensure full coverage? There are several things to consider.

In most situations, renting out your basement or another area of your home does not void your current home insurance policy. Generally, you should not have more than two people or boarders in place. And it’s wise to modify your home insurance policy to cover the renters.

Be sure, for example, that your local city codes allow for you to rent out the space. The policy may not be valid if you are violating local ordinances. In some cases, you'll need to make changes to your policy to reflect local laws. Also note that you may need to provide smoke detectors and specific access points to meet building codes to allow renters.

You'll also want to discuss the importance of your renters having their own policy. In some cases, your home insurance policy may be enough to cover their valuables, but not always. If they have their own renters insurance policy, on the other hand, there's likely ample coverage if damages occur.

It's also important to focus on liability risks. You'll need more than what your basic home insurance policy offers. Insurance coverage of $500,000 or more can be necessary to meet the increased liability risks. With extra liability coverage, which may be inexpensive, it can provide for better protection from common risks.

Home insurance also needs to be carefully valued to ensure it offers enough financial protection for you and all of the assets in your property. If you've modified your home or added valuable space to it, be sure to keep your home insurance agent up to date on the current value of your property and your possessions. This can safeguard your home and your renters.