The insurance company will ask if this is your primary residence or if you will rent it out part of the year. You had better answer honestly or you will find yourself with NO coverage - and that could lead to major problems with the bank and the bank even calling your mortgage to be paid IN FULL in 30 days.
Yes, you do need insurance when you are renting it out. It does not cover the belongings of the rentee but covers you for the loss of your home when you are not in it.
If that raises your mortgage rate, you will just have to put that in the category of "cost of doing business".
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