Tell your insurer before you rent
Most homeowner policies assume the home is lived in by your family only. Renting part of it out is a material change. Disclose it, even if the tenant is a relative paying a small amount.
What the homeowner should have
- Coverage for the whole building, including the second unit.
- Liability coverage that extends to your tenants and their guests.
- Rental income coverage, which replaces lost rent if the unit is unlivable after a covered loss.
- Sewer backup and overland water coverage. Basement units have the most water risk.
- Coverage for appliances and furnishings you provide in the unit.
What the tenant should have
Your policy does not cover your tenant’s belongings or their liability. Ask tenants to carry tenant insurance and to show you proof before they move in.
Make the unit insurable
- Register the second unit with your city if it requires registration, and keep the paperwork.
- Working smoke and carbon monoxide alarms on every level.
- A separate, clear exit for the unit.
- A backwater valve and sump pump, if your home is suited to them.
Common questions
Will renting my basement raise my premium?
Usually somewhat, but far less than the cost of an uncovered claim. Ask for a quote with the unit included before you rent it out.
My relative lives downstairs and pays rent. Does that count?
If anyone pays rent, treat it as a rental and tell your insurer.
This guide is general information, not advice for your situation. Coverage depends on your insurer and your policy wording. Ask a licensed agent before making changes.