Thinking about renting your home on AirBnB? Or perhaps on one of the many other companies that short-term rent your home? Well before you do that, you should know there are some things that will affect your insurance coverage! Let’s talk!
These things range from “will a claim be covered under my current policy” to “do I need an endorsement to add onto my home to be covered” or “do I need a separate policy entirely?” Spoiler alert! You will need a complete, separate policy almost all of the time.
Your home policy will not cover an AirBnB situation. There are some insurance companies that will pay out on the first claim on a policy if they were unaware that you were involved with home sharing and there are some that will cancel your homeowners policy completely if they find out that you are participating in AirBnB or some other home sharing program.
So, you will probably need a commercial insurance policy. I also know you are probably wondering why that is. You are probably thinking “why do I need a commercial policy, I’m only going to have a guest a couple times out of the year!” The reason is that the guest is going to be a paying customer. Your homeowners policy may cover you for non-paying guests, but not paying. Once you have more than one paying guest then it is considered a business.
While more and more companies are beginning to create these short-term (1 night-2 week stay) policies, many more still do not have coverage or a policy that will keep you covered and properly protected. You might even need a bed and breakfast policy or vacation rental policy. This type of commercial policy will cover you if a guest destroys your personal property or damages your building. It also helps cover your neighbor if YOUR guest destroys their property and it also covers if your paying guests have anything lost, stolen or destroyed during the duration of their stay.
It is sometimes a little more costly to have a commercial policy than a homeowners policy but this is because you will be running a business and a business has more of chance on being held liable in the event of a claim(example: trip and fall or stolen property). Claims that you would typically not have incurred if you did not have people consistently staying at your home.
You want the right coverage in the event of a claim, especially if you are held liable if an accident occurs. You do not want to take the chance of the insurance company not paying on the claim or cancelling your policy as a lapse then could occur if you did not disclose that information to them,. This is why it is important to let your insurance agent know what you are doing and any changes you make when it comes to major decisions on the use of your home. For example, other policies may be more appropriate A if you want guests to stay longer then a week or two or if you offer a long term rental. At that time you may need some type of rental dwelling policy!
As you can see, there are many insurance related things that must be considered when you decide to rent your home or participate in some form of home sharing program like AirBnB!