North Texas homeowners warned short-term World Cup rentals could void insurance coverage

With the World Cup expected to bring major crowds to North Texas, some homeowners are looking to cash in by renting out their homes. 

One North Texas realtor says before posting that listing, homeowners may want to check with their insurance company first.  

North Texas realtor Bobby Franklin says leading up to the World Cup, a lot of people are asking him about renting out their homes and what they should know before listing their property online. One thing they always discuss is homeowners' insurance. 

"The homeowners' insurance is required and you want to make sure that you're in compliance with your insurance agent," he said. 

He says what a lot of homeowners may not realize is that renting out their home short-term could put their insurance coverage at risk. 

"Most people have what's called an HO-3 policy, and almost all of those policies have a business activity exclusion," he said. 

Once a paying guest stays in the home, insurance companies could classify that as  "business activity" if they find out. 

"So let's say you rent your house, file a claim because someone damages your property or gets hurt, now all of a sudden your homeowners insurance says we can't honor that claim and because we violated your policy we're going to drop your policy," Franklin said. 

Losing coverage could create even bigger problems for homeowners with mortgages. 

"When you have a mortgage, lenders are required to keep homeowners insurance on your home in order to protect themselves, so they can do what's called a forced policy and those are usually 3 to 5 times the cost of a normal policy," Franklin said. 

One important thing homeowners can do is talk to their insurance company before posting their property online. 

"Airbnb does have their AirCover program, which is their own insurance you can use, but it doesn't do anything to qualify you with your homeowners' insurance," Franklin said. 

Some insurance companies may offer additional coverage options for short-term rentals.