If you own a home in a desirable tourist area -- whether close to the beach, the slopes, or a once-in-a-lifetime sporting event -- you may be wondering whether it makes financial sense to rent out your home to travelers and tourists during peak season. A number of trendy self-booking travel websites have made renting out your home (or just an extra room) easier than ever before. However, there may be some financial and liability factors you'll want to consider before making this leap. Read on to learn more about how using your home as a vacation rental could affect your homeowners insurance rates. 

Will your homeowners insurance cover damage inflicted by vacationers?

The answer to this question often depends upon the language contained within your homeowner's insurance policy. While your homeowners insurance should cover any medical expenses incurred by houseguests who are injured in your home or physical damage they may cause to your property, charging these guests rent can change their status with regard to your insurance policy. 

Some policies offer relatively expanded coverage for short-term or one-time renters (as long as notice is provided to your insurance company before the renters arrive). Others may require you to purchase supplemental coverage or pay a surcharge to help cover this commercial use of your home. Before entering into an agreement to rent or lease your home to guests, you'll want to contact your insurance company to find out exactly what you'll need to do to ensure you (and your guests) are financially protected. 

Should you purchase additional insurance if you're considering renting out your home?

Even if your homeowners policy does cover short-term renters, you may benefit from an additional umbrella policy that can provide additional liability coverage. An umbrella policy kicks in once the coverage limit of your primary homeowners insurance policy has been exhausted, helping protect your personal assets from being seized or garnished if a guest is injured in your home and successfully sues you for damages. Because these policies are used only in extreme situations, coverage rates are relatively low for the amount of protection provided. 

You may also want to shop around for coverage before committing to a primary homeowners insurance provider. Although many companies offer loyalty discounts based on the number of years you've maintained insurance, these discounts may still not lower your bill as much as moving to an entirely different company. By periodically evaluating your insurance rates and soliciting quotes, you'll be able to make sure you're paying as little as possible for solid coverage. For more information, contact a homeowners insurance agency near you.