How Home Insurance Works with a Lease-Back (Rent-Back) Period
Typically, the buyer files home insurance claims during a rent-back period.
A rent-back period is when a home buyer leases the home they just bought to the former owners for a short time, usually less than 60 days.
The buyer's home insurance policy will usually cover damage to the property during this rent-back period. However, the old owner should buy renters insurance to cover their personal property and to protect them if something happens to a guest.
Find Cheap Homeowners Insurance Quotes in Your Area
What is a rent-back agreement?
A rent-back agreement, or a lease-back agreement, is designed to let a seller stay in their old home until they find a new property or can finish the move out. Most rent-back agreements only last for a few weeks to two months.
During the rent-back agreement, a type of short-term rental agreement, the new owner is basically the old owner's landlord and has the responsibilities landlords have to tenants.
- Property maintenance
- Collecting rent
- Keeping the property free of hazards
These agreements are typically negotiated before the buyer closes on the home and only happens when the seller feels like they need to stay in the home a little longer. The seller usually tells the buyer how long they think they'll need to stay in the home, and the buyer can negotiate a shorter lease if needed.
Renting a property you buy back to the old owner isn't something that happens in every sale. However, if you need to move into your new home immediately, let the seller know during the negotiation.
Who pays for home insurance during a lease-back period?
In most cases, the new owner has to pay for home insurance once they close on the home, even if the seller will be living in it for a bit longer. This is because only the owner can get home insurance on the property. The new owner's home insurance policy only covers the home and any of the new owner's belongings in the home. It won't cover the renter's property.
The old owner can buy to cover themselves and protect their personal belongings during the rent-back period.
What does renters insurance cover?
Renters insurance usually covers your personal belongings like clothes, electronics, artwork and other items that you keep in your rental. The items belong to you, not your landlord, and aren't part of the home. The coverage doesn't apply to items owned by your landlord, even if they're stored on site while you're renting the home.
Buyers may also buy landlord insurance
Typically lease-back periods last for between 30 and 60 days after closing, but if it lasts longer, the new owner might need landlord insurance. Some home insurance policies will cover the home for that time as long as you let them know that you're leasing the property to the seller.
Landlord insurance covers most things that home insurance does. However, since you're renting the home to the old owner, the landlord's insurance policy may cover lost rental income if the damage is so severe that the old owner can't stay in the home.
Find Cheap Renters Insurance Quotes in Your Area
How home insurance claims work with a rent-back agreement
The buyer typically files home insurance claims during the rental period.
Because buyers are the owners of the home at closing, they're responsible for buying home insurance on the property, even during the rental period. As the policyholder, they file claims with their home insurance company.
When would a former owner file a renters insurance claim?
Challenges new owners face when using home insurance with a rent-back agreement
There are a few potential challenges you need to be aware of as a buyer before filing home insurance claims during rent-back agreements.
- Insurance companies not covering rent-back periods: Some insurance companies have strict rules about the length of the rent-back period they'll cover. If you file a claim and the seller is still living in the house, they may deny your claim.
- Slower claims timeline: Insurance adjusters may scrutinize claims made during a rent-back period, asking for more information on proof of rent, the lease agreement and other similar information to establish responsibility for the damage and repairs. This can slow the review and decision-making process.
- Gaps in coverage: Your home insurance company may not fully cover damage to the property if you're not living in it yourself.
Talk with your insurance company and be clear when you let them know you're renting the home back to the old owner. Your insurance agent can help you get the right types of coverage to fully protect your home.
How to avoid problems with rent-back home insurance claims
Renting your new home to the old owner can make filing an insurance claim harder, but there are a few things you can do to avoid problems if you need to use your insurance.
- Require the seller to buy renters insurance. Renters insurance will protect the former owner's personal belongings in the property. You can ask for proof of renters insurance before you close on the home.
- Talk to your insurance company or agent. Let your insurance company or insurance agent know you're renting the home back to the old owner and for how long they'll be renting it.
- Consider buying a landlord policy. It may be a good idea to buy a landlord insurance policy when renting back the house. Standard home insurance policies may not cover your house during short-term rental agreements, but landlord insurance will.
- Make sure you have a lease agreement. The lease agreement should include the length of the lease, the amount the seller will pay in rent, who is responsible for certain utilities and any other clauses you feel are necessary.
- Document all damage that happens. If you do need to file a claim either with your home insurance policy or a landlord insurance policy, make sure to document the damage thoroughly. Take pictures of any damage and document what happened and when the damage occurred.
Frequently asked questions
What are some of the common risks of doing a rent-back agreement?
There's always the risk that the old owner won't move out on time, forcing you to wait to move into your new home. The former owners may also cause damage while they're renting from you, which could leave you responsible for paying for any repairs.
Do I need landlord insurance for a rent-back agreement?
Some home insurance policies cover rent-back agreements, but others don't. You'll want to check with your insurance company to see if you're covered with a standard home insurance policy. If you're not or you plan to rent to the seller for longer than your home policy will cover, you may need to buy landlord insurance.
What happens if my home is damaged during the lease-back period?
If your home is damaged during a lease-back period, you'll want to file a home insurance or landlord insurance claim with your insurance company. As the homeowner and landlord, you're responsible for filing any insurance claims and taking care of routine maintenance to keep the home livable and in good condition.
Should the seller get renters insurance during a rent-back?
The seller should typically get renters insurance during the rent-back period. Renters insurance protects their personal belongings kept in the home and also gives them personal liability coverage if anyone is injured when visiting the property. The buyer can require the old owner to buy renters insurance as part of the rental agreement.
Does a standard homeowners insurance policy cover lease-back situations?
Some home insurance policies cover lease-back agreements, but others don't. You'll want to call your insurance agent or your insurance company to make sure your policy covers the lease period. If your policy doesn't, you may want to buy landlord insurance while you're leasing the home to the seller.
Can insurance companies deny a claim during a rent-back period?
Insurance companies can deny claims made during a rent-back period if the policy doesn't cover leasing the home. Speak with your agent before signing a lease-back agreement to make sure you're covered.
Writer
Sarah Jones is a Staff Writer focused on helping readers understand complex insurance topics. She joined Value Penguin in 2025 after working for over a decade in marketing, where she specialized in writing for financial services firms, law firms and real estate companies. She's written for leading mortgage lenders, online banks, virtual payment services and insurance companies.
When she isn't writing, she enjoys hiking the mountains of northern New Mexico with her dog and her family and trying every local coffee shop she can find.
How insurance helped Sarah
Sarah became passionate about car insurance after a particularly big sneeze caused her to back her car into a stone wall. In her defense, the wall came out of nowhere.
Expertise
- Car insurance
- Home insurance
- Renters insurance
Education
- BA, English Language and Literature, Smith College
Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
