Home-share Rentals and Homeowners Insurance
Home-share sites like Airbnb, VRBO, and HomeAway have made it easy for homeowners to turn their spare rooms into alternative streams of income, but running a vacation rental out of your property comes with a few complications. Before you invest in that guest book, take some time to look over your homeowners policy and make sure you are covered for home-share related events.
Your Current Policy
The more visitors you have to your home, the greater the likelihood that one will have an accident or cause damage to your property. Running a business that brings customers to your door increases the number of people coming in and out of the insured property, and with it, the risk to your insurer. For this reason, most homeowners policies have exclusions for “commercial use” that exclude coverage for events that occur as a result of business related activities.
Whether or not a home-share rental constitutes commercial use is up to the discretion of your carrier. Some may still provide coverage if you only rent space occasionally, while others may insist that you purchase extra coverage for paying guests, even if you only rent a few times a year. It’s worth making a call to your insurance carrier to find out how they deal with events involving home-share guests before you need to file a claim.
Purchasing the Coverage You Need
It is likely that you will need to purchase extra coverage for your home-share rental, but the amount and type of coverage will vary based on the policies of your carrier and your personal preferences.
Covering your home-share rental may be as simple as calling your carrier and asking for a special endorsement (also called a rider) to extend coverage to paying guests. These endorsements vary, but should extend your existing coverage to home-share activities, and may increase the amount of coverage available.
Many insurance carriers offer special policies for homeshare hosts. These policies are usually affordable, and most provide coverage tailored to home-sharing--such as funds to fight bedbug infestations or willful damage to your property by a paying guest.
If you take guests with great frequency, and especially if short-term rentals make up a significant portion of your income, a business policy may be the most appropriate route. These policies are the most expensive option, but also provide the most robust coverage, including funds to cover lost income should you have to interrupt your rental activities for repairs.
Coverage Through Hosting Services
Many of the top home-share sites offer some amount of coverage to hosts who book through their services, but these protections are this coverage is incomplete when compared to an insurance policy. Many exclude important areas of coverage such as personal liability, damage to possessions inside your rental,
Insurance policies vary from carrier to carrier, and even customer to customer—something especially true as the industry works out responses to home-sharing. As always, be sure to read your current policy thoroughly before purchasing any new coverage. If you would like help understanding your current coverage, or with purchasing coverage for your short-term rental, we home you’ll let one of Moreland’s independent agents find the policy that’s right for you.