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Do I need multifamily home insurance?
Updating your home insurance provides key coverage for you and the people moving in.
It’s becoming more common for multi-generational families to move in with one another, creating multifamily homes. It saves money on rent or mortgage and is a way to help out with kids or to care for elderly family members. Having additional people live in your home shouldn’t be a problem for your insurance company, but you may want to tweak your home insurance policy to cover having more people, more personal belongings – and therefore more risk for a bigger loss.
What is multifamily home insurance?
There isn’t a separate insurance policy for multifamily homes. Multifamily home insurance refers to standard home insurance covering more than just a nuclear family of one or two adults and their children. This could include generations of the same family, such as grandparents, aunts and uncles, or siblings living in the same home. It could also include friends, coworkers and their families.
What does multifamily home insurance cover?
Having multiple generations, extended family or friends stay in your home impacts your risk. Consider reviewing the details of your policy, such as:
- Liability limits. More people in your home means a greater chance something could go wrong. Increasing your home insurance liability to $300,000 or $500,000 is often inexpensive for the amount of additional protection you’ll have if somebody files a lawsuit against you.
- Home based business coverage. If your new house occupants run their own business from home, you’ll want to add this liability coverage to your home insurance policy. They should still have their own general liability policy, but it doesn’t hurt to carry extra protection yourself for their home-based business.
- A separate renters policy. Whoever is moving into your home could buy a renters policy to cover their contents, even if they don’t pay you rent. This way you won’t have to increase your contents coverage, and they’d receive their own claims check for their covered property in case of a claim.
- Personal contents limits. If your guests don’t buy their own renters policy, consider increasing your personal contents limit. Even if you think $150,000 is enough to cover your property and theirs, it’s not a bad idea to bump it up.
- Valuable personal property. If your new roommates have expensive jewelry or other personal items worth a lot of money, insure those items separately. Make sure your guests are comfortable with listing their valuables on your policy, since you’d be the one to collect a claims check if it goes missing. Otherwise, they could put these items on their own renters policy.
- Home coverage after renovations. If you’re adding an extra living space or bedroom to your home, notify your insurance company so it can increase the coverage on your house. Your house and your contents are separate limits, so structural renovations to your home have to be accounted for if you want to maintain full coverage on your home.
How much is multifamily home insurance?
Surprisingly, your premiums won’t automatically go up if you have more people living in your home, even if they’re not immediate family.
However, you may want to increase coverage, which will raise your rates. If you’re welcoming additional family members or friends into your home, consider increasing your liability and contents coverage. Liability is often one of the least expensive items on your home insurance policy. For example, if you have a $100,000 liability limit, it could cost as low as $10 to $30 a year to increase it to $300,000 or $500,000.
Increasing your personal contents limit generally costs more than increasing your liability limit. If you increase your contents by $50,000, you could be looking at a $30 to $80 increase in annual premiums.
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What’s not covered under multifamily home insurance?
Aside from standard home insurance exclusions, like normal wear and tear or intentional damage, there isn’t anything excluded specifically for multifamily home insurance. However, what’s not covered ultimately depends on how you adjust your policy to reflect the changes in your household.
For example, if your mother moves in with you and she runs a knitting business from your home, any claim resulting from her business won’t be covered unless you add her home-based business to your policy.
If someone is moving in with a dog that’s on your insurance company’s dangerous breeds list, you’ll need to notify your insurer to avoid a potentially denied claim if the dog causes any damage or bites someone. However, you might still face nonrenewal, which means you’ll need to find a new insurer when your policy term ends.
Also, if you don’t increase your personal contents limits or your new roommates don’t purchase their own renters policy, your policy limits may not cover all damaged items in your household. For example, if you have $100,000 in contents coverage for your items and lose everything in a fire, but your family brought an additional $50,000 worth of personal property, you would only receive a claims check up to the amount on your policy, which is $100,000.
Having multiple or multigenerational families living in your house presents unique challenges on your home insurance. Your standard coverage should still apply, but consider raising your personal liability limits or increasing your personal contents coverage.
And while you’re making changes, it might be a great time to compare home insurance companies to ensure you get the most bang for your buck.
Common questions about multifamily home insurance
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