House Hacking - Homeowner's vs Landlord's Insurance

[Nick Bruckner]

I recently bought a SFH with mother-in-law unit. I have a renter in the MIL. We have normal homeowner's insurance on the property. I've heard that a landlord insurance policy is more expensive than homeowners insurance. I want to make sure we are covering our bases with liability but always like reducing costs when possible. Anyone have experience navigating these waters?

[Aaron Porter]

@Nick Bruckner

Depending on the carrier you will need to add the MIL suite as a rider to either your homeowners policy, or you will need a separate policy (landlord/dwelling fire) that covers just the MIL suite.  If you have a claim due to anything happening in the MIL Suite your insurance carrier will likely deny the claim as you are using it as a rental. 

The policy does not need to be set up in the LLC as the LLC does not own the property you are only using it as an operating company. you can however add the LLC as an additional insured to the policy thereby creating some coverage for the LLC if wanted.

The rider or separate policy for the MIL Suite does not cover any personal property owned by the tenant.  In your lease agreement you should stipulate that the tenant must get and maintain a renter insurance policy that will cover their property and some liability coverage.