Renting by the room - Insurance?

Question

I'm in the process of purchasing a 5bd/2ba in Denver as a primary residence. As an individual I obviously don't need all 5 beds so I'm planning to rent out 4 of them to other young professionals in Denver.

Does anyone have experience with the insurance requirements for this? I know that a typical homeowners policy won't cover liability, etc. for this scenario so I'm curious whether people ended up buying.

It looks like the two main avenues are an add-on to existing homeowners policies or getting a separate landlord policy.

Would love to hear from some people that have rented by the room

Nicole A. · Answer

I used to rent out rooms in my personal home and we just have umbrella insurance.

Renting out 4 rooms is a lot of people! I recommend that you have your leases only month-to-month. That way if a living situation isn't working out, you have a way to ask them to move without be "committed" to them for 6 months, a year, or however long the lease could have been for.

Be sure you look into your local rental laws too. For instance, since we were renting rooms in our area, we needed to have more smoke detectors than otherwise was needed. Small details.

Tyler Giering · Answer

@Jim S. I just added on to my homeowners policy. I reported the number of renters and I don't believe my premium even increased. If you feel you need more liability coverage you could probably get an umbrella policy in addition to your homeowners, they are cheap.

Just an heads-up Denver only allows two unrelated persons in a single family home. Other surrounding cities like Aurora, Westminster, Lakewood and Arvada allow more unrelated persons.

Michael Badin · Answer

Also make sure your roommate- tenants get renters insurance.  Their personal property will not be covered by your homeowners policy.

Drew Fein · Answer

@Jim S., which city in Adams County?  The number of unrelated persons allowed depends on the city, and it varies between 3 and 5 people.  Adams County itself requires a certain amount of square footage per occupant; I believe 300 square feet per person.

Craig Curelop · Answer

My buddy @Tyler Giering does something similar in Arvada. He might be able to help you out.

Jim S. · Answer

Hey Bill - 100% agree but in this case I was getting pretty high quotes from the independents (i.e Safeco)

Ended up getting Esurance to cover me at a screaming deal - $650/yr on a $300k property + no issues with up to 4 paying roommates.

Bill S. · Answer

I am way late to this party but will add my 2 cents. You need an insurance broker. Insurance brokers are found under the moniker of "independent agent" That means they don't work for a specific company like State Farm or Allstate. They have several companies that they can place policies with. Safeco is an insurance company that uses independent agents to write policies for them. They have the best rates I have found in Colorado. There is an independent agent insurance company with an office on Kipling around the W Colfax area that specializes in investor insurance. Check them out.

Jordan White · Answer

Hi Jim,

Typically each insurance company has guidelines as to the max number of boarders that are allowed to be in the home renting a room.  Each company is different so it pays to check around, I would suggest calling a local insurance broker as they will have more markets then a direct writer who only deals with one company.  Many companies I deal with allow no more than 2 unrelated individuals in the home, not including the homeowner.  Over this amount it would be insured as a boarding house that many regular market companies will not write.

If the home insurance company will not write the home it may have to go to a specialty/high risk market.  Generally the rates are higher as the risk is higher, but at least  you will have the coverage needed.

Thanks, Jordan

Jim S. · Answer

@Drew Fein - It's technically a "Denver, CO" mailing address but it's in Adams County so I assume I fall into the "unincorporated" bucket. The place is >2k sq ft so I have the 300ft/person requirement met without issues.

Might end up doing only 4 anyway just to keep things simple with bathrooms (2 per).

Thanks Tyler!

Tyler Giering · Answer

@Jim S. I use Nationwide.

Renting by the room - Insurance?

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