Owning and renting out a home has become a very popular way to generate additional income. Looking around our area, who would not want to spend a weekend away at the Jersey Shore in the summertime? Before you decide to rent out a home, condo or apartment of yours through Airbnb or similar home sharing or rental service, it is extremely important that you confirm you have the proper insurance coverage and limits in place to ensure that your family and your property are protected.
Your primary home is usually insured with a homeowner’s insurance policy, which is intended for an “owner occupied” dwelling. As stated by the Insurance information Institute, “Standard homeowners and renters insurance policies are designed for personal risks, not commercial risks.” While some homeowner’s policies allow for “short term rentals,” many do not, and allowing a short-term rental through Airbnb could violate your insuring agreement and jeopardize your coverage. If your property became damaged, or something unfortunate happened during a rental, your insurance carrier could deny your claim. Furthermore, the insurance company may cancel your coverage altogether, making it more difficult and expensive to find new insurance.
Recently, some insurers have made changes to allow for such short-term rentals on homeowner’s policies, depending on the duration. Some carriers allow rentals of a week or less, while others allow for longer term rentals only. Other insurance companies offer endorsements or special home sharing liability policies that can be purchased for specific time periods.
When renting a home, condo unit, or apartment through Airbnb, you are provided with “Host Protection Insurance,” which provides the property owners with primary liability insurance. Airbnb also provides a “Host Guarantee,” which provides some limited coverage for damage to your house caused by guests but is “not insurance.” Both of these coverages provided by Airbnb come with significant limitations, and often require you as the host to attempt to resolve issues with guests directly prior to going through a claim process.
There are many things that may not be covered by the Airbnb provided coverages. Here are a few examples:
Damage or injury resulting from any alleged negligence or intentional act
Events occurring before or after the designated dates of stay (i.e. early arrival, late stay)
Loss of income from the rentee
Damage to your belongings and/or your home
Theft of money, securities, or jewelry
While the “free” coverages offered by Airbnb are nice to have, they both leave significant coverage gaps, and should not be relied on to make sure you and your property are adequately protected.
If you plan on renting your primary residence or any other property you own on a regular basis, most insurance companies will consider this commercial activity. The best option to make sure that you are fully covered would be to have a commercial insurance policy. If you plan on renting a primary or secondary residence that you live in or use, we recommend that you ensure your homeowners or dwelling coverage allows for rentals and provides adequate coverage for all of your exposures.
At Danskin Agency, we advise all of our clients to contact us before they consider any type of rental of their owned property, and especially with any of their owner-occupied properties. Are you considering renting out your home, condo or apartment and aren’t sure if you have the right insurance? Please give us a call or email today, and we would be happy to help!