Vacation home turned to rental - Insurance Issues?

Question

Hey Folks, anyone in here knows the answer to this situation:

If you buy a vacation home and the appropriate insurance for it at closing and then the insurance company inspector comes and views your house after a month or so and it is vacant as expected - then things check out, but if they see tenants living in the house - then the owner of the house has to change the vacation home insurance policy to a renters insurance policy? If that's the case - do the insurance policy guys update the lender as well about it? Currently the price quote for a Single family vacation home in GA state  = $880/year excluding flood and earthquake.

If its changed to include renters insurance = how much of a price hike in quote will be there? I think overall it is a much better idea to get renters insurance even if the home insurance policy guys find out or not if there's any tenants living in the house or not. Agree?

John Mocker · Answer

Varun,

Typically, the Insurance company would not contact the Mortgage company unless the policy is being cancelled.   They might send notification if the the policy is being modified (ie. change in dates, limits, etc.).   Although the Insurance carrier will not specifically tell the Mortgagee about the renters, the cancellation or changes may alert them.

If you plan on renting the home out you should get the appropriate policy from the start.  That will get you the proper coverage and you will know the correct costs from the start.

Varun Parkash · Answer

Thanks i bought the landlord policy :)

Varun Parkash · Answer

Geico mentioned that the insurance company will ask for proofs to show that it is owner occupied - which means utility bills etc.

What is the best approach here?

• let it stay as a WRONGLY APPLIED "primary home owner policy" for now with insurance company with the risk that the 'proofs' that the ins company will demand may not be successfully met.
• if insurance finds out its not a primary and then cancel policy - then they tell lender and lender creates issues
• Get the current wrong policy changed to "seasonal home policy now" and DO NOT change it later and while renting out the place - ensure that renters have the renters insurance policy.

So far inclined towards #3

John Mocker · Answer

Varun,

two that come to mind are American Modern Home and Foremost but I'm sure their are dozens of others.  There are a lot of questions/info that I would need to point you in the right direction.   Feel free to PM me and we can go over the details and I may be able to give more suggestions on companies.

Varun Parkash · Answer

Thanks, the home insurance thingy for a seasonal vacation home versus a rental is turning out to be quiet complicated. The policy is incorrectly written as "primary home owner policy" by the insurer and GEICO does NOT offer any seasonal vacation cum rental policy in Georgia market - which is quiet shocking.

Please recommend some companies who does.

Vacation home turned to rental - Insurance Issues?

Most Popular Reply