Imagine yourself holding two boxes with only one of them being your own. You have to let go of one box and only care for the other. Which box will you choose? If you are like me, I would choose the box that is my own.
This is the same reason why insurance companies charge more for non-owner-occupied homes. If you are the owner of the home, you take extra care of the property. If you don’t have ownership of the property, you may not put in the same amount of care for the home.
We explore the similarities and differences between the insurance policy for owner-occupied and non-owner-occupied homes in this article.
Owner-Occupied Home Insurance
Primary Residence
Your primary residence will be subjected to homeowners insurance. Primary residence means the house you live in. Purchasing insurance for this property will be less costly provided the concept that homeowners will be likely to care for their property more. The insurance premium of owner-occupied homes will be far cheaper than a property that is occupied by anybody else other than the owner.
However, if you have decided to rent out a portion of your home, you must declare this with your insurance company. You can purchase an attachment to your policy that covers for the rented space. Conversely, if you own the house and rent it out to others while you stay in a room in the house, you may no longer get a homeowners insurance. Instead, you might be required to purchase a landlord’s insurance policy.
Second Home
If in case you have a vacation home, you can still be able to avail of a homeowners insurance. However, it may be trickier to apply for homeowners insurance for your second home. There are some insurance companies that require the home to be located in a popular vacation area. You may also choose to purchase a second home in your hometown. Second homes can also be rewarded an owner-occupied homeowners insurance if it is located far from your primary residence.
Non-Owner-Occupied Home Insurance
Renting out your Primary Residence
We have stated earlier that your primary residence is where you live for most of the year. However, if you are lucky enough to take a long vacation, you may decide to rent out your home to earn some extra cash and to have someone take care of your home at the same time. It is important to disclose this to your insurance company as you would need to device a new insurance plan depending on your situation. You may need a landlord insurance during the time that you are renting out the property.
Landlord’s Insurance
If you own a home and you use it as a rental property, you won’t be able to purchase a homeowners insurance for the home. However, you should get a landlord’s insurance policy for your rental home.
Vacated Home Insurance
When you know that your primary residence will be vacant for a few months, you should make a switch to non-owner occupied home insurance. This is because the risk of damage will also increase since there is no one to monitor the state of the home. This type of insurance will only be allowed for a brief period of time.
Insurance for Airbnb rentals
The rise of Airbnb rentals has also raised a question regarding insurance policies that cover these types of properties. The primary insurance for these rentals is provided by Airbnb through their Host Protection Insurance. However, you still need to purchase your homeowners insurance policy or landlord policy depending on the property that you are insuring.
