Vacation home turned to rental - Insurance Issues?

[Varun Parkash]

Hey Folks, anyone in here knows the answer to this situation:

If you buy a vacation home and the appropriate insurance for it at closing and then the insurance company inspector comes and views your house after a month or so and it is vacant as expected - then things check out, but if they see tenants living in the house - then the owner of the house has to change the vacation home insurance policy to a renters insurance policy? If that's the case - do the insurance policy guys update the lender as well about it? Currently the price quote for a Single family vacation home in GA state  = $880/year excluding flood and earthquake. 

If its changed to include renters insurance = how much of a price hike in quote will be there? I think overall it is a much better idea to get renters insurance even if the home insurance policy guys find out or not if there's any tenants living in the house or not. Agree?

[John Mocker]

Varun,

Typically, the Insurance company would not contact the Mortgage company unless the policy is being cancelled.   They might send notification if the the policy is being modified (ie. change in dates, limits, etc.).   Although the Insurance carrier will not specifically tell the Mortgagee about the renters, the cancellation or changes may alert them. 

If you plan on renting the home out you should get the appropriate policy from the start.  That will get you the proper coverage and you will know the correct costs from the start.