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In this economy, more and more homeowners are becoming landlords – many for the first time ever. If your house is sitting vacant because you can’t sell it or plan to be away for a while, it can seem tempting to try and rent it out. After all, why not collect some rent while your house is otherwise sitting empty? Renting your home out on a short-term basis is not necessarily a terrible idea, but it’s important that you go into the process fully-informed of the risks and your responsibilities with regards to your homeowners insurance. It’s a bad idea to just hand someone the keys all willy-nilly, to put it bluntly.

To successfully rent out your home, you have to be willing to look at it as a business and not just your personal residence. That’s the sage advice given by Kimberly Smith, founder of CorporateHousingbyOwner.com. Her website is a place where owners can put listings for furnished homes available for rent to workers who are in a location for a short period of time. There’s a brisk market for alternative corporate housing for business professionals who need to travel out of town for short periods, and this niche can easily coincide with the glut of homeowners looking to make some quick cash. The thing is, Smith stresses, that you can’t get into this type of situation “if you love every last piece of furniture in your home and you’d be devastated if something was gone.”

From a home insurance standpoint, you need to understand what the risks are and what personal responsibility you take by allowing someone inside your home. Renter lift a paperback book, a remote control, or some of your towels? Did they improperly use your toaster oven and burn it out? You are probably out of luck, and these things should be looked at as the cost of doing business by renting out your home, since they won’t be covered by insurance.

On the other hand, you need to have your ducks in a row with regard to the threat of more serious matters, like fire damage or liability. These areas should fall under the purview of your homeowners insurance, provided that they are within your policy limits and you cough up the deductible. If a renter is involved, you may need to add an endorsement or rider to your original policy to make sure that everything is legit and will be covered if something happens.

Smith mentions one of her clients who came home to find the baseboards and walls of their house soggy with a week’s worth of water as the result of an exploded hot water heater. A renter had attempted to adjust the water pressure, made the heater malfunction, and then ignored the damage. Happily – if you can even say that – the homeowner’s insurance company covered the damages, and the renter forked over all costs involved. Of course, you might not be so lucky. Either that, or getting the justice you deserve will be a long and arduous road.

There are accidental losses, and then there are also losses that are deliberate, unexpected, and very hard for homeowners to safeguard themselves against. Robert Eisenstein, founder and CEO of HomeRun Homes, which operates a rent-to-own property website at Lease2Buy.com, mentions theft of appliances, light bulbs, copper pipes, or furniture as just some of the more severe losses that homeowners must be aware of. Stripped electrical outlets and wiring can be costly and difficult to repair. Knowing that you are at risk of these things happening to you is an essential part of preparing yourself for having a short-term renter in your home.

What things should you do to get ready if you have made the decision to go ahead and take the plunge? The experts list a few different steps, all of which are valuable to novices in the renting industry.

First of all, keep your insurer in the loop and be perfectly honest with you. This can save you some major, huge problems later. If it turns out that you need to file an insurance claim and did not receive the proper authorization to have a renter covered under your policy, you could have your claim denied and your policy entirely voided! You may need to obtain an extra rider or endorsement, depending on the language of your contract. This may cost you a bit more money. Be prepared for that likelihood. The good news, Smith says, is that it usually costs only a few hundred dollars to cover the presence of a renter in your home. That’s a few hundred dollars well-spent to protect yourself and to keep yourself on your insurance company’s good side.

Even if your policy allows for renters, make sure that you are absolutely clear on the terms. Your policy could have specific exclusions that void the coverage if the renter in question occupies your home for more than a certain number of days. Many of these clauses fall under the “non-owner-occupied” provisions that kick in when the owner(s) of the home are not actually in residence for an extended period of time, usually fourteen days.

Consider taking out an umbrella policy on your home, one which will cover liability, theft, property damage, and pretty much anything else you need to take care of any conceivable problems that might arise. If a renter or one of their guests injures themselves on your property, you will want to make sure that you are safeguarded from any potential legal fallout.

If you have any valuables in your home, it’s best to remove them before turning over occupancy to a renter. Barring that, your best bet is to lock your things up. The addition of a lock can turn a spare closet or cabinet into a safe storage area for things of sentimental or monetary value. Things like jewelry that are especially valuable should be put in a safe deposit box at the bank. One tip utilized by the pros is to record a “pre-rental video” of the home right before you leave, so that you can prove the condition of the property in the event that a dispute should arise.

Finally – make sure that you always have a backup plan. If you have a renter lined up for a lucrative time period, make sure that you have another on standby just in case the first one prematurely moves out or fails to show. If you are planning to be out of your home for that time period, you risk incurring your insurance company’s wrath over having the home vacant for too long if there is not a warm body inside. Knowing the rules and what you can do to obey them is the best thing you can do as someone renting your home. It will save you headaches and potentially even money lost later.