More and more people are looking to utilize alternative accommodations, like Airbnb, while travelling to help cut down on costs. Which means, thanks to the laws of supply and demand, more people are listing their homes or condos as short-term rental properties. While it may be a good way to earn a little extra cash, how does it affect your property insurance?
If you are renting your property through Airbnb, you will have some coverage through their Host Guarantee program. This coverage is granted to all hosts and protects up to 1,000,000 in damages. There are some exceptions to note, as the Host Guarantee does not protect cash and securities, pets, personal liability, or shared/common areas. The Airbnb website also stresses that their coverage is not a replacement for your regular property insurance, but offers you additional coverage on top of it. They strongly suggest that you procure your own property to ensure your home and belonging remain as safe as possible.
To be blunt, your standard property insurance policy alone will not cover all the risks associated with using your home as a short-term rental property. Many providers are still trying to figure out how to get on board with the Airbnb trend, and have yet to adapt their policies to it. While coverage pertaining to tenant insurance tends to be fairly attainable as it deals with long-term rentals, there is much more risk involved in insuring someone who rents out their space on a short-term basis.
It is strongly encouraged that anyone who wishes to host short-term rentals to review and understand the terms of their insurance policy and what it does and does not cover. Not all insurance plans will cover damage or loss to property caused by a guest who books your space, so it important thoroughly understand your policy.
If you find that the combined coverage of Airbnb’s Host Guarantee and your existing property insurance is not enough to cover the risks of hosting short-term rentals, you may want to seek additional insurance. Because the notion of services like Airbnb is still relatively new, not everyone in the insurance world has adapted and begun to offer short-term rental insurance.
Some insurance providers have come out with short-term rental coverage premiums that can be added on top of your pre-existing property insurance. Some offer coverage for those renting the space for up to 30 days of the year, 60 days, 90 days, etc. The more days you are looking for coverage, the more expensive the premium becomes. Other insurers have adopted a form of coverage that allows them to provide limited short-term specific coverage. It is important to keep in mind, that no matter what form of coverage you are able to obtain, more often than not there is zero coverage for damages caused by those renting your space (which is where Airbnb’s coverage comes in handy).
To help find the coverage you need, speak to your broker to see if any such insurance is offered through your provider. If not, then it would be best to shop around and find an insurer that would be able to provide you with some form of short-term rental coverage.
If you are renting out your property on a short-term rental basis, be sure to notify your insurer. Not only will they be able to help you get the coverage you need, but it will save you from any negative repercussions down the road. If you fail to disclose how you are utilizing your home, and you put forth a claim as a result of something a short-term tenant did, odds are your claim will be denied. In some cases, your insurance can become void, and in extreme cases, legal action can be taken.