Should a Seasonal Home Occasionally Rented to Others Be Insured Under an HO-3 or a DP-3?
Question: “We have an insured who owns a secondary seasonal home, which she occupies. She also occasionally will rent it out to someone else for a month or so when she is not there. The remainder of the time it will be vacant. Should this be written as an HO-3 homeowners policy or a DP-3 dwelling policy?”
Answer: As always, it depends on who is offering the HO-3 and what their forms say. However, if the policy is based on ISO forms, the home can probably be insured under an HO-3 with an endorsement added, assuming the underwriter agrees.
The Insurance Services Office (ISO) Homeowners Policy Program Manual states that a seasonal dwelling is eligible for a homeowners policy. It defines “seasonal dwelling” as “a dwelling with continuous unoccupancy of three or more consecutive months during any one-year period.” Therefore, ISO rules permit a home that is continuously unoccupied for three or more consecutive months in a 12-month period to be insured under a homeowners policy. Again, though, it’s the underwriter who makes the call as to whether the risk is acceptable. That might depend on how much time it’s unoccupied.
You wrote, “She also occasionally will rent it out to someone else for a month or so when she is not there.” It sounds like she’s renting it through Airbnb or VRBO or some similar app-based service. She needs to add ISO endorsement HO 06 63 09 17, titled Broadened Home-Sharing Host Activities Coverage Endorsement. It’s designed for people who rent out their homes for short periods of time using a smartphone app. If the carrier doesn’t use ISO forms, they might have an endorsement that accomplishes the same thing.
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