For many, owning a second home, investment property or vacation rental property is part of the American dream. In 2017, 9.26 million American households owned a second home.¹ Just as your primary home comes with costs, upkeep and liability concerns, the same goes for your rental property. When it comes to rentals, a question of insurance coverage arises. Will your primary homeowners policy still cover your rental, or do you need a separate insurance policy? If so, what type of policy do you need?
Consider the following
It’s important to communicate the details of your rental with your agent to obtain the best insurance plan for your needs. Consider these four main factors when deciding which insurance provides the best coverage for your rental property:
- Income generated — How much money are you bringing from your rental annually? Insurance companies typically use a dollar limit to determine whether income is a business activity, which requires a separate policy, or incidental, which may allow coverage to be extended from your primary or a secondary homeowners policy.
- Rental duration — How often is your property rented? Do you rent your property for one or two weeks a year or for a longer period? Is the property rented for short periods on a regular basis, such as with Airbnb or VRBO?
- If you rent your property for short periods on a regular basis, this will likely be considered a business activity, which wouldn’t usually be covered properly by a personal homeowners policy. You would most likely need a separate business or commercial policy.
- Renting your property for long periods of time most likely requires a separate rental dwelling fire or landlord policy. These policies provide property coverage for physical damage to the structure or the home caused by covered perils. They also provide coverage for personal property you may leave onsite for maintenance or tenant use, such as appliances, lawnmowers and snow blowers. And they may offer liability coverage if a tenant or guest gets hurt on the property.
- Scope of rental — Do you rent out a portion of your home, such as your basement, guest house/casita or a room? Or do you rent out your entire home? If you rent out a portion of your home, your primary homeowners policy may be able to provide adequate coverage however, renting your entire house will likely require a separate policy.
- Your renters — Do you rent to the same people or to different people each time? Longer term and repeat renters are more likely to take care of the property as if it was their own.
Regardless of what type of policy you select, your tenants’ personal possessions are generally not covered under your policy. They would likely need their own renter’s policy, which should also cover liability for incidents caused by their negligence.
How Nationwide Private Client responds
You can easily extend the liability and personal property coverages from a Nationwide Private Client primary homeowners policy to your rental property. By adding the right endorsements, you can also extend the coverage to your secondary rental home or a separate structure on your residence property.
Coverage for your personal property kept at a secondary residence is limited under our primary homeowners policy. If you need more coverage, you can add an endorsement to specify an additional amount of coverage for your personal property at your secondary residence.
Have an apartment on the residence premises that you rent regularly? Your primary homeowners policy will provide up to 10% of the dwelling limit of liability for damage to your appliances, carpeting and other household furnishings resulting from a covered loss.
In select states,² Nationwide Private Client offers the option for full coverage on homes and condominiums when they are rented full or part time. With the full-coverage option, base policy coverage applies with no reduction or restriction due to the home or condominium being rented. We also offer a reduced-coverage option which, has lower additional property and personal liability coverages than our base homeowners policies.
The following coverages are included when you rent all or part of your home regardless of which state you live in:
- Fair rental value if a covered loss requires occupants to leave the part of the residence held for rental
- Debris removal
- Sewer backup at full dwelling value
- Coverage for your LLC or family trust
- Total loss deductible waived up to $50,000
- Personal injury coverage
Your homeowners policy may not cover losses incurred while your secondary home is rented to others; you may require a more specialized policy. Whether you own a second home that you lease to long-term tenants, rent your beach cottage when you’re not using it or rent a guest house/casita on your primary residence, you could be liable for injuries to tenants and their visitors or responsible for damage they cause. Consult your agent on which policy is best for you.
Why Nationwide Private Client
Affluent clients’ insurance needs may not be met by most mass-market carriers. Nationwide Private Client is dedicated to helping protect the assets and reputations of our clients. Our highly personalized insurance products, services and concierge-style claims management are thoughtfully designed to meet the distinctive needs of affluent individuals and families. We are committed to providing you a superior experience whenever you need assistance.
Nationwide Private Client offers these added benefits:
- Claims — Exceptional claims handling provided by Nationwide Private Client.
- Financial strength — Nationwide, a Fortune 100 company,³ is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A1 by Moody’s and A+ by both A.M. Best and Standard & Poor’s.4
- Charitable giving — Nationwide Private Client demonstrates a commitment to local communities through its Partners in Giving program, helping numerous lives each year. This supports Nationwide's belief in being a good corporate citizen where we work and live. Since 2000, the Nationwide Foundation, a nonprofit, private foundation, has contributed more than $400 million to charitable organizations across the U.S.
 Coverage available in DC, DE, CT, FL, GA, IA, MD, NJ, NY, PA, RI, VA.
 Based on revenue, Fortune (June 2016).
 Ratings affirmed 7/21/16 by Moody’s, 7/7/16 by A.M. Best, and 5/24/17 by Standard & Poor’s.