With the increasing popularity of home sharing platforms like Airbnb and Vrbo, many homeowners are looking into renting out their primary or secondary homes. But your home insurance plan may not automatically include coverage for Airbnb or similar services, as not all homeowners insurance plans cover home sharing.
If you’re considering renting your home to temporary guests for any length of time, you’ll want to be sure your home is protected against potential damages and losses. You’ll also want to make sure that you protect yourself from any sort of personal liability claims. With the right home insurance plan, you can avoid exposure to unfavorable financial responsibilities. Below, the experts at Weed Ross have put together everything you need to know about homeowners insurance as it relates to Airbnb, Vrbo, and other home sharing services.
In this article, we will cover:
- What is home sharing?
- Home insurance and home sharing
- Insurance for home sharing as a business
- Insurance for home sharing as a renter
- Do home sharing services provide coverage?
What is Home Sharing?
Home sharing, or peer-to-peer rentals (P2P rentals), are websites and services like Airbnb that connect homeowners with guests and allow the guests to pay for a designated length of stay, similar to a hotel. Home sharing is becoming progressively more popular as technology and apps have revolutionized the way people vacation. Accommodations on platforms like these often range from renting entire homes for weeks or months at a time to simply offering a twin-size bed for the evening.
But no matter how you look at it, home sharing is here to stay. For instance, and despite the challenges of COVID-19, Airbnb reported a 22% year-over-year increase in consumer spending in July of 2020—the midst of the pandemic. The point being: people are more than comfortable with the idea and it’s only becoming more commonplace.
Home Insurance and Home Sharing
Home sharing has an interesting connection and affect on home insurance policies, as this was a concept that didn’t exist until recently. Home sharing is a for-profit business model, which is where it diverges from the traditional coverages included in standard home insurance policies. Home insurance was originally constructed to financially protect the homeowner from perils such as fire, lightning, and other natural disasters. Accordingly, most home insurance policies don’t intrinsically provide coverage for these types of lodging accommodations and services. Things get interesting when you start to operate a business out of your home.
Insurance for Home Sharing as a Business
Before renting your home out to anyone, even through home sharing platforms, you would do well to read your homeowners insurance policy very carefully. Standard home insurance policies have several limitations and exclusions that would omit coverage for many home sharing and renting scenarios. They almost always exclude business-type scenarios. For example, many home insurance policies will not cover renting apartments located in other structures, such as detached garages. Additionally, most home insurance policies do not provide coverage for personal property of renters or boarders of your dwelling.
If you are looking into home sharing, standard home insurance won’t always get the job done. Typically, you will need a homeowner or landlord insurance policy with special endorsements, depending on the length of time you plan to rent out the property. If you are looking to rent your home out for shorter stays, you’ll probably need homeowners insurance with an endorsement. If you are looking to rent your property out for extended periods, such as for weeks or months at a time, you may need to purchase landlord insurance with an endorsement. These types of policies will give you the coverage you need to adequately protect yourself from liability when renting out your home. If you attempt to rent out your dwelling or partake in home sharing with a regular policy, you can be putting your insurability in jeopardy and the carrier may not cover claims or provide protection.
Insurance for Home Sharing as a Renter
If you are renting your dwelling and want to sublet, you most likely won’t have a homeowners insurance policy to begin with, so you’ll definitely want to protect yourself in terms of insurance. Firstly, be sure that your landlord even allows you to sublet your space. Secondly, check your renter’s insurance policy to see if your coverage extends to someone else renting your place (known as a “sublessee”). If this is not the case, you’ll need to look into other options, such as business insurance or landlord insurance. Additionally, if you don’t plan on living in your rental while renting it out, the sublessee will need their own renter’s insurance policy. This can get complicated, so feel free to reach out to the experts at Weed Ross.
Do Home Sharing Services Provide Coverage?
Some home sharing services do provide home-sharing insurance as part of their policies. But make sure to read the fine print—check out the exclusions and limitations and examine what is and isn’t applicable to their coverage. Airbnb, for instance, offers Host Protection Insurance and a Host Guarantee for their users. Their Host Protection is a liability insurance program that may provide up to $1 million in liability coverage. Airbnb’s Host Guarantee is a property damage protection program that provides up to $1 million in property damage protection. These types of coverages vary significantly, depending on the service you opt to utilize.
Whether you’re new to renting and home sharing or a seasoned veteran, it might be time to double check some of the finer details. We all love a good side hustle, but here at Weed Ross, we want to ensure that you take the proper precautions to cover your insurance bases. With over 60 years as Western New York’s most reliable insurance agency, Weed Ross offers the experience and expertise to accommodate all of your insurance needs, no matter what they might be. Still have questions about home-sharing insurance, home insurance, or renting out your home? Get in touch with us today.