House Hacking and Insurance Liabilities

[Wendy S.]

Hi Everyone. How do you adequately protect your Private Residence while renting out rooms?

My scenario might be a little tricky.

Home is co-owned with non-owner occupied.

So I live in home currently, other owner will live elsewhere.

Large home, with possibility of renting out 5 bedrooms all with private bathrooms, while I still live in the home.

Problems:-

1. The current insurance allows renting to 4 others while occupying myself. Didn't know of cap before.

2. How to deal with insurance seeing that the other owner will no longer live at the home. Can I still have a home owner insurance policy with boarding or similar rider?

3. Could I remove other owner from Insurance policy and keep home owner's insurance? Will this put other owner at risk if there is a claim?

4. Even more issues for insurance when I move out, as now there will be 6 bedrooms available to rent while leaving 3 guest/bonus rooms. Yes, now Insurance would be Landlord policy and not homeowner but issuer still have a cap on # of rooms rented.

More of a tax question

Reporting income for non owner occupied vs owner occupied for the property. Who claim insurance deduction?

[Stuart Udis]

The insured should be whomever is listed on the deed. Doesn't matter if the person is physically occupying the property. Next you have to be mindful of exclusions in both your property insurance and your general liability coverage. Many standard policies are written for single-family residential use and will either exclude or materially limit coverage if the property is being operated under a room-rental model unless that use is explicitly disclosed and approved by the carrier. You need policies that clearly allow individual bedroom rentals.

Just as importantly, confirm that the municipality where the property is located actually permits bedrooms to be rented individually. In many municipalities this triggers zoning, licensing, or code requirements tied to boarding houses, rooming houses, or transient use. Even if your insurance carrier is willing to underwrite the risk, an illegal or non-conforming use can itself become a basis for denying coverage following a loss.