Living in New England has many perks. One being the close proximity of the ocean and the hundreds of lakes within driving distance. Many families looking for a family vacation at an affordable price have found that renting a house on a lake for a week or more is a great solution. The question I will deal with is what coverage, if any, do the renters bring with them from their homeowners policy.
First, any personal property that the family brings with them is covered at the rental house just like it would be at their regular residence. If the family packed the bikes and a couple were stolen the bikes would be covered the same as if they were stolen from home.
Likewise the Bodily Injury Liability coverage would treat the rental house just like the family’s home. The typical homeowners policy considers any part of a premises: (1) Not owned by an "insured"; and (2) Where an "insured" is temporarily residing; to be an insured location. That means that if during their stay the family has guests over and one of the guests is injured because of the negligence of the renting family the policy will provide the same protections as if the injury occurred at the family’s primary residence.
So far so good. What the renting family must be concerned with is any property damage they may be responsible for at the vacation house. The typical homeowners policy has a $500 limit for property damage per occurrence, however, damage due to fire, smoke or explosion would be covered up to the full limit of the Personal Liability coverage. Personal Liability coverage starts at $100,000 and is typically available in $100,000 increments up to $1,000,000.
Let’s look at two scenarios. In the first one a child starts running a bath but is called downstairs because the family is going for ice cream. The child forgets about the running bath and by the time the family gets back the water is pouring through the dining room ceiling. It costs $10,000 to repair. The family’s insurance policy covering their primary residence will only pay $500. The other $9,500 is the responsibility of the renting family.
Scenario two has the same facts and damages except that the child was cooking soup when the family left the house and the damage was caused by fire. In this case the policy would respond with the full $10,000 because the $500 limit does not exist for fire damage. In essence the only limit for fire damage is the Personal Liability limit the family has on their homeowners policy. In my examples I had the damages at a relatively modest amount. Obviously a fire loss could easily result in far greater damages making the lack of the $500 limit all the more important.
People should not be scared out renting a vacation home. The same coverage and limits apply whether you are renting a home or a hotel room. You may want to check your personal liability limit to make sure you have sufficient limits to cover the house you are renting.
If you have any questions about your homeowners policy please give us a call at 781-598-5000 or email me at jolson@ColumbiaInsuranceAgency.net.