How does homeowner’s insurance work with Airbnb?
Home-sharing is when you rent out your home, or a part of your home, to short-term guests (think AirBnb). This trend has been growing over several years and is becoming very popular. In fact, around 19% of the total U.S. adult population engaging in it – that’s over 47,000 people! Home-sharing comes with its share of risks and it’s important to be aware of insurance coverage options.
If you have ever considered renting out your home to a paying guest through a site such as AirBnB, it’s important to what implications this may cause. You need to understand whether your homeowners insurance policy covers home sharing. Here are some things for you to consider before renting out your home, guest room or even couch.
Short-Term Rentals vs. Extended Period Rentals
Homeowners insurance may help you cover short-terms rentals if you are renting your home for a single time or special occasion. For example, if there’s a major event in the area such as the SuperBowl, or graduation in the area, it depletes the local hotel space and its very common for people to rent out their home for the extra cash it brings in. Many insurance companies take this situation into account and will extend your coverage to the renter on a one-time basis. Other companies may require you to purchase an endorsement (or an add-on to your policy) to provide broader coverage for the renter.
However, if you are planning to rent your place on an ongoing basis, you may require other types of insurance. If you are planning to rent your home for short periods but regularly, insurance companies may consider this to be a “business”. This would require you to purchases business insurance. If you are planning to rent your home for an extended period of time, like six months or a year, you will likely require a special policy like a landlord policy.
Home-sharing – What Is Actually Covered?
When renting out your home to others, it’s important to know how your insurance protects both you and your guests. Let’s take a look at some common scenarios to help you better understand insurance coverage with home-sharing.
Scenario 1: There was a fire in my home while I was hosting a guest on AirBnb. Does my policy cover their property?
Most likely not. The paying guest would need to look into their own renters or homeowners policy to cover losses to their own personal property.
Scenario 2: My guest stole my laptop during their stay. Does my policy cover my property?
Your homeowners insurance most likely will not cover this. However, you may be able to add an endorsement to your policy that can help cover your belongings in the event they are damaged or stolen while you are a home-sharing host.
Scenario 3: My guest got into a fight on my front lawn. The person injured a neighbor and caused damage to my neighbor’s property. Does my policy provide coverage?
A standard homeowners policy won’t extend coverage to a guest in this case. The guest would need to look into their own renters or homeowners policy for liability coverage.
Scenario 4: My guest accidentally knocked over my lamp and broke it. Does my policy cover my property?
Not likely. A standard homewner’s policy would not cover this type of damage. Also, since most home and renters policies exclude property damage to a rental property, your paying guest may not be covered either.
Home-sharing Coverage: Key Points and Precautions
A home-sharing host’s standard homeowners policy will not cover the following:
- Property stolen by paying guest
- Personal property of paying guest
- Liability coverage for paying guest
- Damage to property caused by paying guest
In order to protect yourself against the unexpected, here are some precautions you can take as a home-sharing host:
- Talk with your insurance agent to understand what your existing homeowners policy may or may not cover.
- Ask what exclusions may apply.
- Consider requiring paying guests to have their own home or renters insurance policy.
- Consider purchasing additional coverage to help protect your property from paying guests.
- Look into Airbnb’s Host Protection Insurance program and see if it may be right for you.
At Jessica Liu Insurance Services, we want to ensure you have adequate coverage to protect both your property and yourself. Don’t hesitate to call us at 415-386-2283 with any questions or to review your home insurance policy.