By now, most people have either heard of or used short-term home rental platforms such as Airbnb, HomeAway, or VRBO (Vacation Rentals by Owner). These platforms allow homeowners to rent out a second home or their private residence to strangers with accounts online.
At first glance, the system sounds great. You already own your property, and perhaps you’ll be away on vacation for a few months. Why not make a little extra money by renting out your home?
Think about it a little longer, however, and you’ll quickly realize that there is indeed a glaring problem: Insurance coverage.
Understanding the insurance surrounding short-term home rental platforms like Airbnb can be a complicated affair. Below, we’ll aim to go over the basics of this issue and outline our recommendations on the matter if you’ve been considering home rental yourself.
Understanding Primary Insurance Offered by Hosting Platforms
Many people who consider renting out their home assume that they will be covered by the primary insurance often offered by the hosting platform. Airbnb, for example, boasts that they have a comprehensive liability insurance plan in place for their hosts.
Read the fine print, and you’ll see that this insurance only covers you in basically one scenario: When a renter is injured on your property. For example, let’s say that someone slips and falls on a rug in your home while they’re renting from you. You’ll be covered in this scenario if the individual were to become seriously injured or press charges.
On the other hand, if any of your property is damaged (a broken chair, missing tiles, broken appliances, or other intentional or unintentional destruction or damage), this is not covered by the Airbnb insurance.
Are You Becoming a Landlord?
Another consideration to make is your homeowner’s insurance. Contrary to popular belief, your homeowner’s insurance will not cover you when renting out your home. You may have to purchase additional insurance such as a rider, business insurance, or landlord insurance, depending on how long and how frequently you’ll be renting.
Non-Insurance Related Issues to Consider
Lastly, let’s discuss some non-insurance related issues that may pose problems should you decide to rent out your home.
First, if you live in a condo or belong to a home association, is subletting even an option? The bylaws of many condo and home associations state clearly that subletting or renting is not an option.
Next, consider how your neighbors may feel about you renting your home. Those who rent homes to go on vacation may be quiet, clean, and respectful, but they also might not be. It’s possible you’d be putting your neighbors in an awkward position by allowing complete strangers to rent a home right next to them.
There’s also the practical matter of the mess. Again, depending on who you rent to, you could be dealing with a huge catastrophe after your renters leave. And because primary insurance through the hosting platform will not cover this, it will be your responsibility to clean it up.
Finally, consider security and privacy. You’re inviting strangers into your home. Even if you cordon off certain areas, it’s not a guarantee that they won’t go there. Your property and your privacy plus the confidentiality of certain sensitive information you may have at home won’t be either.
Talk to a Smart Move Insurance Agent Today
The most important thing to take away from this article is that you absolutely must speak with your insurance agent as soon as possible if you are considering renting out your home.
Our agents at Smart Move can discuss this matter with you any time. Give us a call or visit our office in person today.
