Insurance Setup for Duplex: Owner Occupied + Airbnb, and Long-term Tenant

Upstate New York, New York
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Insurance Setup for Duplex: Owner Occupied + Airbnb, and Long-term Tenant

Savannah Enright
Member since 2020 · 3 posts · 0 votes

I recently transferred my dual-use property into an LLC for liability protection. I have two units on the property, one has a long-term tenant, and one is my primary place, but I do ST rentals (Airbnb) as I travel a lot.

My insurer, State Farm, told me I need commercial "Rental Dwelling" coverage now instead of homeowners. The cost is only about $150 dollars more, for significantly less coverage on the property, and the coverage gaps that don't make sense for my situation. I am wondering how others manage.

  • 1. Loss of Rents coverage - This policy only covers the permanent tenant, NOT ST rentals
  • 2. Personal Property coverage - is too low for business assets, 21K, and I'm being told I need renters insurance for my own property.
  • 3. Renters Insurance - Agent says get renters insurance, which seems designed for actual tenants, not owner-operators. Someone else told me "Standard renters policies have an exclusion for property you own a financial interest in." I am looking into this, but if that is true then rental coverage would be useless.

How are you insuring your properties, especially if you own them via business structure + mix short-term rentals with other income/personal use? Any recs for policy types or carriers that work well for this setup?

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
1mo

I would go with what your insurance company says is needed in order for them to insure you.

Now that your in an LLC, you must follow stringent rules or the LLC will be of no value. Make sure you know these rules and follow them to the letter. Just being in an LLC doesn't necessarily protect you like some people assume.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    1mo

    I would go with what your insurance company says is needed in order for them to insure you.

    Now that your in an LLC, you must follow stringent rules or the LLC will be of no value. Make sure you know these rules and follow them to the letter. Just being in an LLC doesn't necessarily protect you like some people assume.

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  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    1mo

    Check with an experienced Farmers Insurance agent. Farmers can cover you and their rental insurance division Foremost, can take care of LTR/STR.

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  • Michael Koeplin
    Saint Paul, MN · Member since 2015 · 49 posts · 33 votes
    1mo

    I think the challenge is that your property no longer fits neatly into one insurance bucket.

    You're owner-occupying one unit, renting another long term, and operating an STR in the other. Each of those uses can have different coverage expectations, so it's not surprising you're running into questions about loss of income, personal property, and business use.

    I'd be less focused on finding the cheapest policy and more focused on finding an agent who regularly works with mixed-use properties and short-term rentals. I'd want someone to walk me through exactly how they handle the owner-occupied portion, the STR income, the long-term rental income, and your furnishings before assuming everything is covered the way you expect.

    You've asked some good questions. I'd add one more: if a fire made the STR unit uninhabitable for six months, how would the policy treat that lost income? The answer to that would probably tell me a lot about whether the policy fits the property.

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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    1mo

    My wife is a licensed property insurance agent in FL, but it should be the same for NY I imagine.  I have sold some properties to "house hackers" which is essentially what you are doing, and generally speaking you will be insuring the property in the same way as if it were 100% rental (DP3 policy).  It is important it is a landlord policy and it is rated for Short Term Rentals.

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  • Vijay FriedmanBusiness Member
    Miami, FL · Member since 2026 · 766 posts · 121 votes
    1mo
    Quote from @Savannah Enright:

    I recently transferred my dual-use property into an LLC for liability protection. I have two units on the property, one has a long-term tenant, and one is my primary place, but I do ST rentals (Airbnb) as I travel a lot.

    My insurer, State Farm, told me I need commercial "Rental Dwelling" coverage now instead of homeowners. The cost is only about $150 dollars more, for significantly less coverage on the property, and the coverage gaps that don't make sense for my situation. I am wondering how others manage.

    • 1. Loss of Rents coverage - This policy only covers the permanent tenant, NOT ST rentals
    • 2. Personal Property coverage - is too low for business assets, 21K, and I'm being told I need renters insurance for my own property.
    • 3. Renters Insurance - Agent says get renters insurance, which seems designed for actual tenants, not owner-operators. Someone else told me "Standard renters policies have an exclusion for property you own a financial interest in." I am looking into this, but if that is true then rental coverage would be useless.

    How are you insuring your properties, especially if you own them via business structure + mix short-term rentals with other income/personal use? Any recs for policy types or carriers that work well for this setup?

    @Savannah Enright
    That's definitely a unique setup, and I'd probably look for an insurance broker who regularly works with mixed-use investment properties rather than relying on a standard homeowners policy. Since you have an LLC, an owner-occupied unit, a long-term tenant, and STR activity all on one property, getting someone who understands those overlapping exposures can make a big difference.

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  • Owen RosenBusiness Member
    Professional · Clinton Township, MI · Member since 2015 · 673 posts · 259 votes
    1mo
    Quote from @Savannah Enright:

    I recently transferred my dual-use property into an LLC for liability protection. I have two units on the property, one has a long-term tenant, and one is my primary place, but I do ST rentals (Airbnb) as I travel a lot.

    My insurer, State Farm, told me I need commercial "Rental Dwelling" coverage now instead of homeowners. The cost is only about $150 dollars more, for significantly less coverage on the property, and the coverage gaps that don't make sense for my situation. I am wondering how others manage.

    • 1. Loss of Rents coverage - This policy only covers the permanent tenant, NOT ST rentals
    • 2. Personal Property coverage - is too low for business assets, 21K, and I'm being told I need renters insurance for my own property.
    • 3. Renters Insurance - Agent says get renters insurance, which seems designed for actual tenants, not owner-operators. Someone else told me "Standard renters policies have an exclusion for property you own a financial interest in." I am looking into this, but if that is true then rental coverage would be useless.

    How are you insuring your properties, especially if you own them via business structure + mix short-term rentals with other income/personal use? Any recs for policy types or carriers that work well for this setup?


     Taking New York out of the equation as I'm not licensed there:

    This should be doable with a homeowners policy that allows for home-sharing and also allows for a duplex property with one unit rented.

    You'll have to make sure that your STR usage falls within the acceptable parameters of the home-sharing endorsement as they all allow different usage levels.

    The other option would be an owner-occupied dwelling policy that also allows for the things mentioned.

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