If the state of the economy has caused you to look into making more income, you may be considering renting out part of your home to a tenant to earn extra money. Your typical homeowners insurance may not cover any tenant that is leasing a room out for an extended period of time, but things are different for tenants that are only staying short term. Here is what you need to know about your insurance coverage for short-term rentals.

Frequency of the Rentals

The amount of times that you are renting out a room will affect if the short-term tenant will be covered by an existing home insurance policy. If you're only renting out the space one or two times each year, existing insurance may actually cover any losses or damages caused by the tenant if you were to file a claim.

The biggest factor you need to know is if you're living in your home while you are renting it out. A typical home insurance policy assumes that the owners of the home are the ones occupying it at all times. If you aren't living in your home along with your tenant, you might have to add them to your home insurance policy in a rider.

Always check with your insurance company, because there can be exceptions for coverage. For instance, if you are renting out a room for a special event that is in town, all your insurance company may require is that you notify them about it. If not, your claim could be denied. If you are regularly renting out a room throughout the entire year, it could be classified as potential business activity, which would require you to get landlord's insurance to provide coverage for those tenants.

Coverage Options

When you can't get coverage through your home insurance policy, you need to find a way to protect yourself in case something does happen. The room rental company Airbnb, for instance, actually provides $1 million in coverage for bodily injuries or property damage. Always check with the company you are working with to see if they provide similar coverage with your membership terms.

If you are not using a room rental company, then landlord insurance will be your best option. It is an additional policy designed to cover any damage caused by the tenant while living in your home. Some landlord policies can even help replace any income that you end up losing because of the actions from a tenant.

For more info, check with a home insurance agent from a firm like Holt Insurance Services.