Somebody in Georgia bought their first house about a year ago, got fired six months later, and has been sending out applications into a job market that isn't answering. They'd rather rent the place out and move in with family for a couple of years than sell it. They found the house for a price they'll never see again, in a location they want to come back to.
That's someone trying not to lose the one asset they have.
Renting it out is often the right call. Here's what has to happen first, in the order it has to happen, because the insurance piece is the one that quietly breaks and nobody warns you.
First, the mortgage
You remembered them asking whether you'd be living there. That was the owner-occupancy clause, and it's real.
Most conventional and FHA loans carry an occupancy requirement, commonly 12 months from closing. Past that window, renting the property out is generally permitted, and people do it constantly. Inside that window it can be a default under the note.
Don't guess from memory. Pull your closing package and look for the occupancy rider or the occupancy section of the deed to secure debt, or call your servicer and ask directly what your loan requires. It's a two-minute call and it's the one item here that has legal teeth.
At roughly a year in, you're likely fine. Confirm it anyway.
Then the policy, because this is where people get wiped out
Open your homeowners policy and find the definitions. It covers the "residence premises," and that term means the dwelling where you reside. Not the house you own. The house you live in.
The day a tenant moves in and you don't live there, you're outside the form. Your carrier won't notice on its own. They notice when an adjuster shows up after a kitchen fire and a tenant answers the door.
You need a DP-3, also called a landlord policy or dwelling fire policy. Some carriers will endorse a homeowners policy for rental use instead. Either way, the carrier has to be told, and it has to be effective the day you stop living there.
For someone already financially stretched, this is the single highest-consequence item on the list. A denied fire claim on a house you still owe on is the exact outcome you're trying to avoid by renting it in the first place.
What changes on a landlord policy
Dwelling and other structures work the same way. Still buy replacement cost, still base it on a real rebuild estimate.
Personal property drops way down, and it should. The policy now covers property you own at the location: appliances, the mower in the shed, anything you left behind. Your tenant's belongings are theirs to insure.
Loss of use becomes fair rental value. If a covered loss makes the house unrentable, the policy pays the fair rental value you're losing while it's repaired, less any expenses that stop. On a standard DP-3 that limit is 20% of your dwelling coverage; some carrier forms cap it by time instead, often 12 months. On a $2,400 a month rental with a 6-month rebuild, that's up to about $14,400 of income you'd otherwise cover out of pocket while the mortgage keeps coming due. When the rent is what's keeping the house, this coverage is the whole point.
Liability becomes landlord liability. A tenant's guest falls on the back steps. A dog bite in the fenced yard. Carry a real limit, not the $100,000 default.
The HVAC problem
The central air died when you tried to flip it to heat, and you're wondering whether window units are good enough.
For your own comfort, sure. For a rental, it causes two separate problems.
On the insurance side, underwriting asks about the heat source. Window units and space heaters are an underwriting flag, and some carriers won't write a landlord policy on a dwelling without permanent central heat. Space heaters are a leading cause of home heating fires, and carriers price and decline accordingly. A dwelling you can't get properly insured is a dwelling you can't safely rent.
On the landlord side, Georgia law requires a landlord to keep the premises in repair under O.C.G.A. Section 44-7-13. How that applies to a specific HVAC system in a specific lease is a question for a Georgia landlord-tenant attorney, and worth one consultation before you sign anybody up. I'd plan on the system getting repaired or replaced as part of the cost of turning this into a rental.
Four more things people miss
The vacancy clause
Most forms restrict coverage once the property has been vacant more than 60 consecutive days, and some non-standard forms use 30. Vandalism, malicious mischief, glass breakage, and theft drop off first, and loss from frozen pipes is excluded unless you kept heat on or drained the system. That's exactly your risk window between move-out and the first tenant. Tell your agent your timeline and get a vacancy endorsement if there's a gap.
Your umbrella probably excludes it
A personal umbrella covers the properties scheduled on it and requires a qualifying underlying liability limit on each, commonly $300,000 to $500,000. An undisclosed rental may not be covered at all. Schedule it.
Require renters insurance in the lease
$100,000 liability minimum, proof before the keys change hands, you named as additional interest so you're notified if it cancels. In Georgia it runs the tenant around $20 a month, and it gives you a first layer of defense when a tenant causes damage.
Short-term rental is a separate category
If the plan is Airbnb instead of a 12-month lease, most landlord forms exclude or sharply limit that use. Say the word out loud to your agent, because the right coverage exists and it isn't a DP-3.
On property management
For a first-time landlord who's about to be living somewhere else, a management company is usually worth the 8% to 10%. Tenant screening is the part that saves you, and it's the part that's hardest to do well on your own.
Two insurance notes: most management companies require you to carry a landlord policy with a stated liability minimum and to name them as an additional insured, so get their requirements before you bind. And a management agreement doesn't move any of the coverage obligations off you.
Do it in this order
- Confirm what your loan's occupancy clause requires.
- Get the HVAC assessed and get a repair or replacement number.
- Tell your agent the move-out and tenant move-in dates before either happens, and switch to a DP-3 effective the day you stop living there.
- Schedule the rental on your umbrella.
- Put the renters insurance requirement in the lease and collect proof before move-in.
- Send the new declarations page to your mortgage servicer so their insurance tracking doesn't flag a lapse and force-place a policy on you.
The cost question
A landlord policy usually runs somewhat more than the homeowners policy it replaces, because tenant occupancy rates higher. Cutting most of the contents coverage takes some of that back, so the gap is usually smaller than people expect.
And it's a lot smaller than a denied claim on a house you're renting out specifically so you don't lose it.
Send me the dec page
The free Claim Ready Coverage Check works on rentals. Send me your current declarations page and what you're planning for the property, and I'll tell you what has to change, what your fair rental value coverage should be, and whether your liability limit matches what you're actually taking on as a landlord.
If money's tight right now, say so. I'll tell you which items are genuinely urgent and which can wait, instead of quoting you everything at once.
Email it to michael@ins.insure. Licensed in Georgia, Alabama, Tennessee, Ohio, Arkansas, and Texas.