Insurance policies when house hacking

Owen RosenBusiness Member

Professional · Clinton Township, MI · Member since 2015 · 676 posts · 259 votes

1mo

Lots to unpack here:

1. Homeowners for now

2. Notify homeowners if you're performing renovations - might need other insurance for this

3. One policy once it's a duplex - not two.

4. You should be able to find a policy that allows for owner-occupied in one unit and rental in the other (could be homeowners or dwelling fire chassis)

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Aaron ZimmermanBusiness Member

Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes

1mo

I'd contact a good insurance agent but I'd imagine it'd be the same policy

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Hali Snyder

Member since 2023 · 8 posts · 7 votes

1mo

Independent insurance agent in PA here!

You're going to want a single family owner occupied homeowner policy.

You'll want to notify your agent once the property is being rented out but this is as easy as raising your liability limit (my recommendation is always $500k or $1mil depending on the company as some will not offer $1mil) and checking a box that states that a portion of the home is offered for rent. The absolute easiest way to do this is to just set it up this way from the jump if the property is being financed and the insurance escrowed. Once you officially turn this into a duplex (if that's the plan rather than just portioning off a section of the house), this policy will need to be changed to multifamily instead of single family but if it doesn't show on county records as multifamily you'll run into a whole slew of questions to answer. The majority of companies will also want to know if there's major renovations being done currently and if yes, this disqualifies the property from many of them. The difference in premium solely from changing the policy to a portion of the home being rented out will likely be minimal, this is more dependent on whether you're offering long term or short term.

You'll have 1 policy no matter what because both units will be deeded together on one parcel and you cannot double insure a singular parcel.

You don't want to go with a landlord policy, a dwelling fire policy, or just a homeowner's policy without the rent intention being listed. The first two will cause you to be underinsured in your scenario for your personal use, the second also causes you to be underinsured but in a different way as the first as the additional coverages for the landlord policy won't be included and some companies will not allow those endorsements to be added if it isn't classified properly. Plus, if you misrepresent by not disclosing the rented portion and something happens, you could run into a totally denied claim and being dropped by the company.

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Jared Townsend

Insurance Agent · Orlando, FL · Member since 2015 · 297 posts · 122 votes

1mo

Quote from @Ethan Goletz:

Hey! So I am acquiring a single family property that I am going to house hack. It is technically designated as "single family" but over time I will eventually turn it into a 2 unit and live in the cheaper unit while renting out the other.

I am still shopping around for insurance policies before settlement, any tips for how to go about it? From what I can gather, I should 100% pursue a HOMEOWNERS insurance for now. And then shop around for LANDLORD insurance once I'm ready to rent the other unit(late 2026/early 2027)

So would EACH UNIT HAVE A DIFFERENT POLICY? Or is there a situation where I can have one policy cover both?? I have heard small tidbits about an OWNER OCCUPIED WITH TENANT POLICY, but haven't been able to actually find any.

For now, I am just looking for homeowners insurance. But I am making it clear to the agencies that I plan to use the property as a rental in the future

thanks!

You're doing the right thing - just be up front with the agency and let them do their thing. If its a true duplex then you'll most likely get coverage for both primary & rental use on a single policy. If its a detached structure and you're living in that one...it could be split into two policies.

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Mohammed Rahman

Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes

1mo

Hey Ethan,

I’d be upfront with the insurance agent about the full plan from the start. Since you’ll be owner-occupying one unit and renting the other, you may not necessarily need separate policies for each unit. Ask specifically about an owner-occupied policy that allows for a tenant.

Once you’re ready to rent, confirm with the carrier whether the existing policy can be modified or if you’ll need a different policy. Coverage can vary by carrier and how the second unit is legally classified.

I’d also make sure the 2-unit conversion is properly permitted and recognized locally. Insurance coverage doesn’t make an otherwise unpermitted conversion legal.

I’d shop a few independent agents and explain the situation exactly as you described it. Always happy to connect and answer any further questions you may have!

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Amber Stout

Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes

1mo

Since you’re living there, I wouldn’t assume you need separate policies for each unit. I house hacked myself and the biggest thing is being upfront with your insurance agent about exactly how you’re using the property.

Homeowners insurance makes sense while it’s owner occupied as a single family. Before you convert/rent the other unit, call your agent and update the coverage. Depending on the carrier, they may be able to cover the owner occupied + rental portion under one policy/endorsement.

I have a GREAT agent in PA that can help out. I'll send you DM.

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Insurance policies when house hacking

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