How transparent do I need to be with insurance when house hacking rent by room?

Question

Hi,

Recently my insurance renewed for my home which there was a increase of over 50% to my premium. I've made no claims which they told me that this was increases across the board. I find this to be a ridiculous increase so I decided to start shopping around elsewhere and have gotten some quotes which included home-sharing coverage from a couple of independent brokers. After getting those quotes, I decided that I would try to cut the middle man out (independent brokers partnerships with insurance companies are factored into the premium, but I could be wrong) further reducing my premium by directly contacting the insurance companies based off those quotes. I contacted Travelers Insurance and after talking with an agent, I was told that they could not underwrite my policy due to the fact that I was renting out by the room and not to a family. I currently live in the basement of a SFH and rent out 5 bedrooms with 3-12 month leases.

I don't understand this. I tell the independent brokers the same as I what I tell the insurance company. How come brokers can find polices that include home-sharing but I can't do it directly with the insurance company? Is there a point of being too honest with the insurance company when asked about whether renting by the room vs family and short lease vs long lease terms? I don't want to lie and later be denied a claim if I ever had to file one. But also can the insurance company determine who I rent to and how long I rent rooms for?

Is it also true that if you frequently switch insurance companies that it will reflect in increases in the premium? I don't know for sure but I think that I may have gotten the new customer promotional rate with Safeco then followed into the 2nd year where they significantly increased the premium. Seems kind of sketchy like what cable/internet companies do which I would hate to have to change insurance every year to get competitive rates. I understand that insurance gradually goes up every year due to various factors but a 50% increase seems excessive.

I know I said I wanted to cut the middle man out but I would like to go with an independent insurance broker if they can find me a competitive policy so if anyone could recommend someone that specializes in house hacking rent-by-room strategy for the Denver metro area, that would be great as well!

Tanner Pile · Answer

@Jacob Shumate

Mine went up about 45% as well. My insurance broker recommended I switch to nationwide for better rates. He also mentioned Travelers was doing this to almost everyone.

Ryan Thomson · Answer

@Jacob Shumate the purpose of insurance is to save you if something catastrophic happens. I would recommend you don't lie to your insurance company because I would worry about them denying a claim if something catastrophic happens.

Also, a good way to keep premiums down is to have the highest deductible possible. If you have reserves, this could be a good way to keep your premium expenses down.

Dan Guenther · Answer

Hey @Jacob Shumate - that does sound a bit extreme! Reach out to me and I can give you a few recommendations here to double check with.

John Mocker · Answer

Jacob,

We are an independent agent.  90% of the companies we represent only deal through agents.  Of the rest, some have in house quoting and handling but they charge the same rate as if you had an agent.  There are a few that have a different set of rates for direct.  They are not always cheaper than the same company policy through an agent.

In most cases, if you use an Independent Agent, they are comparing many companies for you, can remarket you at renewal if there is an increase, help with problems, suggest cost savings, assist with filing claims, etc.

As far as being too honest, if you fail to inform the company or agent of the room sharing, you could end up with a problem at claim time.  If that company does not insure room sharing or if they have a limit on the number of boarders (more common) you could be giving them an excuse to void the policy.   The companies underwriting guidelines are filed with the state Insurance dept.

Regarding the surcharge for switching, I cant answer for all companies but the ones we represent do not penalize.  Some companies use that as a factor to credit your policy if you are with a company for 3+ years as it shows stabiltiy.

Jacob Shumate · Answer

@Tanner Pile

Go with Branch. Surprisingly they are cheaper than what I had last year. According to my broker, it is a new insurance company that started covering Colorado last year. Since they started after the 2020 wild fires occurred so they never had to pay out any claims.

How transparent do I need to be with insurance when house hacking rent by room?

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