House Hack Homeowners or renters insurance?

10 Replies

Hey BP community,

My wife and I are about to start our first house hack with a duplex. I was wondering how everyone treated the homeowners' insurance? For example, If we take a full homeowners policy on the entire duplex we would essentially be covering the renter's personal property because the policy acts as if the entire large structure is our personal residence and requires a proportional person property coverage. Is it possible to just put the whole structure on a "rental policy" where it does not cover the personal property, then just take out renters insurance on your side? If you don't have a "homeowners" policy, will escrow or the mortgage company allow a primary residence loan?

Just a few questions I had to cut some costs as we peel back the onion of the house hacking world!

Hmmm, I don't there is anything that prevents you requiring the tenant to have his/her own renters' policy.  And I'm not 100% sure I agree with the idea that your homeowners policy would cover personal belongings of somebody else that is not listed on the policy.  

What you are asking to do here is negating a lot of the benefit of house hacking but landlord insurance costs more than does homeowners insurance.  And then you raise the question of running it all through escrow.

Does the duplex have one address or two?  You might be able to just get separate policies in place for each side.  To me that seems like the correct way to do it, but your agent will be a better resource to answer that.  

Just be sure you find an insurance agent that has handled something like this before -- many of them haven't.

Jaren,

A homeowners policy on a 2 family house only covers your personal property.  It would not cover the belongs of the tenant in the rented unit.   If you are renting out both units then it would no longer meet the eligibility of most companies homeowners policies.  If it is not owner occupied, then you need a Dwelling/Fire policy.  That policy would not cover the tenants contents but could cover your contents (appliances, lawnmower, etc.) at the rented duplex. 

@Mark Sewell and @John Mocker Thank you very much for your responses! I don't believe I worded my question very well, let me try again. When I went to get an insurance quote, I had to detail the entire duplex, all 4,000sf, and rightfully so because I own the entire duplex. However, in that policy, there is a requirement for personal property coverage much be a minimum percentage of the ENTIRE structure value. It makes sense for a single-family property because if you buy a 4,000sf house, you probably have enough stuff to fill a 4,000sf house.

I don't think my homeowners' policy will actually cover the renters' personal belongings, only figuratively because the premium reflects me covering the renters' belongings. I thought of it as I was being forced to have personal belongings coverage for the entire duplex. So my question was trying to find out if there was a clever way to arrange the insurance so my premiums would reflect owning the entire duplex but only living in half.

Did I articulate it better?

When I've been getting insurance quotes on duplexes, and telling the insurer that I will be living in one side, they tell me it's best to get a landlord policy that covers the structure and carry renters insurance for my personal belongings. That's what USAA and Farmers have told me at least. 

Thanks, @Marissa Carroll   That is what I was wondering because I had a similar conversation with USAA but was not sure if that was what the savvy house hackers out there were doing or if it was what USAA was recommending (not knowing the intricacies of the house hack).

What you recommend for a SFR house hack? Carry my own homeowner's insurance and have tenants carry their own renter's insurance? If they do not want to get their own insurance, would a document signed by them stating that the homeowner's insurance does not cover their personal property and that they will not hold the homeowner accountable be a possibility?

@Kevin Phu found this old post and wanted to see if you found an answer to the SFR house hack insurance question.

We are currently looking at single family with mother in law suites to rent out and what to know how to structure the lease/insurance

Originally posted by @Alan Johnston :

@Kevin Phu found this old post and wanted to see if you found an answer to the SFR house hack insurance question.

We are currently looking at single family with mother in law suites to rent out and what to know how to structure the lease/insurance

 bump

Originally posted by @Tyler Brenneman :

I'm also very curious what you all ended up finding/doing


I carry my own rental property insurance and require each tenant to carry their own renter's insurance to cover their personal belongings.