Do I need to change my homeowners insurance if I rent out my house?
Yes—you should switch to a landlord insurance policy before renting out your home in Colorado or Utah. Standard homeowners insurance won’t cover tenant-related damages or liability once you have renters.
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Complete Guide to Renting Out Your Home: Insurance Essentials
Why This Question Matters for Colorado and Utah Residents
Renting out your home can be a smart financial move—but not updating your insurance leaves you unprotected against the unique risks landlords face. Colorado and Utah homeowners are especially vulnerable due to:
- High claim frequency: Colorado ranks 2nd nationwide for hail and wildfire claims with average annual home losses of $3,320. Utah's rapid population growth means increased tenant-related risks and higher property turnover.
- Legal & regulatory requirements: Both states require you to notify your insurance carrier if occupancy changes. Failure to do so can result in non-renewal or denial of claims.
- Rental market shifts: With more homeowners turning to the rental market in cities like Fort Collins and Salt Lake City, understanding the difference between homeowners and landlord insurance is crucial for financial protection and legal compliance.
What Most People Get Wrong
A common misconception is that your standard homeowners policy will still protect your home during a rental period. In reality, almost all homeowners policies in CO and UT exclude coverage for homes rented to others; claims for tenant-caused fire, water, or liability incidents may be denied outright.
Another mistake is assuming personal property (like furniture left behind) remains covered. Most landlord policies exclude your personal belongings but protect appliances and fixtures provided for tenant use.
The Complete Picture
If you plan to rent out your home—even for short periods—you need landlord insurance (also called dwelling fire or rental dwelling coverage). Landlord insurance differs from homeowners insurance by covering:
- Property damage from tenants (accidental or intentional)
- Liability if a tenant or guest is injured on your property
- Loss of rental income if the home becomes uninhabitable due to a covered claim like fire or hail (a major risk in both CO and UT)
Expect landlord premiums to run 10–20% higher than homeowners policies, reflecting the increased risks. In Fort Collins, that's typically $2,900–$3,200 per year to insure a $250,000 home as a rental. In Salt Lake City, averages are $3,200–$3,400 per year. CO and UT regulations require proper notice for rental conversions; failure to notify your insurer can result in declined claims or policy cancellation.
Bottom line: If you rent out your home without the right policy, you risk uncovered losses, legal exposure, and non-renewal—especially during severe weather or tenant incidents common in the Rockies region.
Making the Right Decision for Colorado and Utah Residents
Question 1: Are you fully protected against tenant-related risks and severe regional weather?
As a landlord in CO or UT, consider:
- How would you handle a tenant-caused fire or water backup (both prevalent regional claims)?
- Would a guest injury or lawsuit jeopardize your assets without landlord liability coverage?
Question 2: Have you notified your insurer and updated your coverage?
Colorado mandates 60-day notice before policy non-renewal. Failing to update to a landlord policy can result in denied claims—always inform your insurer in writing before the first tenant moves in.
Question 3: Are you planning for long-term changes and market shifts?
Rental income is appealing, but higher claims frequency and premium trends in CO/UT (50%+ increases since 2019) mean your insurance plan should be reviewed annually to stay protected as laws and risks evolve.
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Real World Examples
Fort Collins: Julie Turns Her Home Into a Rental
Background: Julie moved to Denver for work and decided to rent her Fort Collins house near Harmony Road, keeping some furniture for tenants' use.
Coverage: Converted from traditional homeowners ($2,646/yr) to landlord insurance with $300,000 liability and $1,200/month loss of rental income coverage.
Monthly Premium: $255/month ($3,060/year)
The Incident: A kitchen fire started by tenants required $14,500 in repairs. The home was uninhabitable for 6 weeks during peak hail season.
Total Claim Cost: $16,200 (fire repairs, loss of rent, smoke remediation)
Julie's Cost: $1,500 deductible—covered quickly, including lost rent for repair time.
"Having landlord insurance meant I didn't lose six weeks of rental income and all the repairs were handled fast. It saved me from serious financial stress."
Salt Lake City: Mark's Basement Flood Rental
Background: Mark owns a bungalow in Sugar House, Salt Lake City. He decided to rent it out when he moved in with his partner.
Coverage: Standard homeowners policy at $2,900/year, but did not switch to landlord insurance before tenants moved in.
Monthly Premium: $242/month ($2,900/year, homeowner rate—should have been $3,400/year for landlord)
The Incident: A burst water heater flooded the finished basement, causing $12,500 in damages mostly to flooring and lower cabinets.
Total Claim Cost: $12,500
Mark's Cost: Entire $12,500—claim was denied because the home was tenant-occupied and not properly insured as a rental.
"I didn't realize my insurance wouldn’t pay. I thought my regular coverage was enough—I learned the hard way that it isn’t."
Park City: Lisa Prepares for Winter Rentals
Background: Lisa owns a vacation home near Park City's ski slopes. She rents it out during winter months while living in Denver.
Coverage: Upgraded to landlord (short-term rental) insurance, including $500,000 liability and special coverage for lost winter rental income.
Monthly Premium: $335/month ($4,020/year)
The Incident: Heavy snowfall and an ice dam caused water intrusion, forcing $18,200 in repairs and lost rental income for three weeks of the peak season.
Total Claim Cost: $21,400 ($18,200 repairs + $3,200 lost income)
Lisa's Cost: $2,000 deductible—insurance paid the rest, including peak-rental income loss.
"I’d never risk being on the hook for repairs or lost rents, especially with how fast the weather changes in the mountains. My FoCoIns advisor made sure I had every detail covered."
Avoid These Common Mistakes
Mistake #1: Not Switching to Landlord Insurance
What People Do: Keep their homeowners policy after renting out the property.
Why It Seems Logical: They assume existing coverage is enough or fear higher premiums.
The Real Cost: In Colorado and Utah, claims for tenant-caused damages are often denied—meaning homeowners are left paying out of pocket for fires, water damage, or liability lawsuits. A single incident can result in $10,000–$50,000+ in costs, as seen in regional claim statistics.
Smart Alternative: Always inform your insurer and convert to landlord insurance before tenants move in. FoCoIns can compare rates from multiple carriers and guide you on the best coverage for your rental situation.
Mistake #2: Assuming Personal Property is Still Covered
What People Do: Leave personal belongings or furniture in a home and expect their old coverage to apply during tenancy.
Why It Seems Logical: Homeowners policies once protected their things—so why wouldn’t they still?
The Real Cost: Most landlord policies exclude your personal property. If left behind, items like furniture, electronics, or art may not be covered in events like fire or theft. In CO/UT, high rates of wildfire and property crime make this gap especially risky, potentially costing $1,000s if not addressed.
Smart Alternative: Move valuables out before renting or arrange for a landlord policy that specifically includes limited owner property coverage if needed. Our advisors will ensure you know exactly what’s protected.
Mistake #3: Overlooking Liability and Legal Requirements
What People Do: Focus only on property coverage, missing the need for increased landlord liability or notice requirements.
Why It Seems Logical: Most have never faced a tenant injury or lawsuit, or assume homeowners liability is enough.
The Real Cost: Colorado and Utah both require notification of occupancy changes. Ignoring this can result in cancelled policies or lawsuits. Without landlord liability, just one injury claim can result in $100,000–$500,000+ in legal and medical costs.
Smart Alternative: Always update your insurer and secure at least $300,000–$500,000 in landlord liability coverage. FoCoIns helps you navigate these steps for compliant, complete protection.
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