Insurance for House Hack

[Mike Hinkley]

Hi all - apologies if this post is redundant, but I haven’t managed to find an answer to my particular scenario on the threads…

I am under contract on my first deal. It’s a 3/2 single family home with an internal/attached studio in-law suite. This is not a true duplex - the “units” have separate entrances but they are also adjoined by an internal door (will be permanently locked), the utilities are all together, and there’s only one address. I plan to house hack by living in the in-law suite and renting out the 3/2 unit to a long-term tenant. 

My question is what type of insurance policy(s) will I need to cover this situation? Is a normal homeowner’s insurance policy sufficient, or will I need a seperate landlord policy or umbrella liability policy, or some combination of the 3? Note, I am planning to require my tenant to carry renter’s insurance. 

Let me know if any further information about my situation would be useful to help answer the question… Thanks for your help!!

[Aaron Porter]

@Mike Hinkley  yes you will need a landlord policy.  this is mainly as you will have tenants and tenants create a different liability class than what is covered in a homeowners policy.  

requiring your tenants to have a renters policy is also a good call.  make sure that you are listed as an additional insured on their renters policy.  

having an umbrella is also a good call, but you have to have underlying coverage for an umbrella to work.  

The policy/policies that you will need may vary from one carrier to another.  one insurance carrier may be able to put the landlord with added personal property into one policy or they may want you to have separate policies.  working with a good independent insurance agent is what you actually need to do.  either use google and find someone local (make sure that your agent works with real estate investors on a regular basis.  as you scale and grow your needs will change and your agent needs to be able to understand how to set up your policies.  

[Chris John]

@Mike Hinkley

I just wanted to throw out that it probably wouldn't cost much to turn that doorway into a wall (unless you'd like to keep the door for whatever reason).  Just a thought as I know it would be my preference under those circumstances.

Best wishes

[Kevin Hoag]

I would recommend going with a landlord policy and then you and your tenant both purchase renters insurance for personal possessions. There are insurance companies out there that will offer a personal policy that will allow you to also rent out a separate unit but since it is not technically a duplex it would probably have to go through an underwriter for approval. Find yourself a good agent who is willing to check with their underwriting team to make sure they are properly insuring your property. I also think it would be wise to turn that door into a wall and make it a true duplex.

[John Mocker]

Mike,

Normally, the proper policy is a Homeowners as the building will be owner occupied.  If this was a true two family, the coverage for the rented portion would be automatic.  As a single family you should discuss with the agent to see if the Insurance Carrier will accept it and also what, if any, endorsements need to be added to the Homeowners form for the rental exposure.

If you do have to go the Landlord policy (Dwelling.Fire or DP3 form) you may also need to have Renters Insurance for your belongings and Loss of Use.

[Mike Hinkley]

Thanks all, I really appreciate the help! Sounds like there are some differing opinions here so I am going to find a local independent insurance agent to ask and I will report back what I find out! 

[Jason Bott]

@Mike Hinkley with this property in the grey area of Single or Duplex, any agent will need the underwriter to get involved and provide the proper policy forms to make sure you are covered for the unique set up.

Normally, this location will be your primary home, and you are buying in your individual name, the only option you will have is to insure it as a Homeowners policy, by definition is a policy for an "Owner Occupied Dwelling".  Landlord policies typically do not allow them to be Owner Occupied.

Ask for a Homeowners policy with the proper endorsement that will also give you Landlord Liability coverage.