Renting your basement apartment to your adult son can be a great way to reconnect while the two of you both save money on housing costs. In fact, renting to your son is usually more cost effective than finding another tenant. While renting to an unrelated tenant can require more homeowners insurance and higher premiums, a relative is usually covered under your existing policy.
Homeowners Insurance Coverage
If someone who lives with you is covered by your homeowners insurance, your property and liability protection extends to his belongings or actions. If his personal property is damaged or stolen, your insurance company will offer compensation. If your co-resident leaves his sneakers in the hall and a guest trips over them, your homeowners insurance will pay the guest's medical bills.
Most homeowners insurance policies automatically cover any relative living in your home, even if that person is over the age of 21 and paying rent. However, if your basement apartment has a separate entrance, your insurance company may require your son to purchase a separate renter's policy to cover his belongings.
Room Renter Insurance
If your son brings a roommate or significant other with him to live in your home, that person may not be covered under your current homeowners policy because she is not a relative. Different insurers have different rules for this. Some will increase your premiums for renting a room. Others will not raise your rates as long as you don't rent to more than two tenants at once. Still others simply won't cover any claims related to a renter under your homeowners policy. In most cases, your son's roommate or significant other will need a separate renter's insurance policy that includes liability and property protection.
Hosting the Grandkids
If your son has children, they will likely be covered under your homeowners insurance policy. According to the American Institute of CPAs, your homeowner's insurance extends to any children under the age of 21 who live in your home even if they are not your relatives. If your son has stepchildren, for example, or children he cares for who are not his biological children, they will be covered under your policy.
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