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Renting out a house or condo: why a homeowners policy is the wrong form

A lot of rental property in the Pointes and Harper Woods started life as someone’s home. When the owner moves out and a tenant moves in, the homeowners policy quietly stops fitting — and some carriers will not pay a claim on a house that is no longer owner-occupied.

The landlord form

Rental dwellings are insured on a dwelling fire policy, most often the DP-3 form. It covers the building on a replacement-cost basis, detached structures, the owner’s property used to service the rental (appliances, for example), and premises liability. It does not cover the tenant’s belongings — that is what renters insurance is for, and requiring it in the lease is a good idea.

Loss of rents

If a covered loss makes the unit unlivable, loss-of-rents coverage replaces the rental income while it is repaired. Size it to the actual rent and a realistic repair period — a plaster house after a fire is not a sixty-day job.

Short-term rentals are a different animal

Airbnb and similar platforms are “business use” to most carriers. Some DP-3 policies exclude it; some offer an endorsement; heavy use may need a commercial policy. The platform’s host protection is not a substitute. Tell Carly the number of nights a year and the platform.

When your own home becomes a rental

Call before the tenant moves in, not after. The policy needs to change forms, and the timing affects both coverage and price. If the house is vacant between occupants for more than a month or two, ask about a vacancy endorsement — vacant houses have their own exclusions.

This guide is general information about insurance in Michigan, not advice about a specific policy. Coverage depends on the policy’s terms, limits, exclusions and eligibility, and a request does not bind or change insurance.

Common questions

People also ask.

Can I keep my homeowners policy if a relative lives there rent-free?

Sometimes, with the carrier’s agreement. It depends on the carrier and the arrangement. Ask before assuming.

Should I require renters insurance?

Yes. It covers the tenant’s belongings and gives them their own liability, which reduces the chance a tenant’s loss becomes your claim.

I own three rentals. Separate policies or one?

Both are done. A small portfolio can sometimes be written on one policy with a schedule; Carly can compare.

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