Renting to a relative is common and it is still a tenancy. The informality is the problem: no lease, below-market rent and a policy that was never changed.
A relative paying rent is a tenant. The absence of paperwork does not make it an owner-occupied home.
Three things about an arrangement nobody wrote down.
If you do not live there and somebody else does, the property is not owner-occupied, whoever they are. A homeowners policy left in place describes a house you occupy, and a carrier assessing a claim looks at who was living there rather than whether you are related to them.
Loss of rent is based on the rent actually being received. Charging a relative a nominal amount means the cover reflects that nominal amount, not what the property could earn. It is worth deciding deliberately rather than discovering it after a fire.
Most family tenancies run perfectly. The ones that do not are the reason a short written agreement is worth having, covering who pays for what and what happens if the arrangement ends. It also helps considerably at a claim.
Making the informal arrangement insurable.
The single fact that decides which form applies.
It sets the loss of rent figure, for better or worse.
A short agreement helps the tenancy and the claim both.
Tell us who lives there, what they pay and whether anything is in writing.
We write it as the tenancy it is, without making it awkward.
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