Renting their house for a short period of time is becoming more and more common for homeowners. Websites such as Airbnb.com have facilitated these rentals and more and more people are looking to them for additional income. If you have thought of using your home this way, you should know most homeowners insurance policies do not cover businesses run out of the home.
With this in mind, here are some things you might want to consider before taking your first short-term rental:
- Generally, homeowners policies pay for injuries of guests on the premises. However, your insurance company might decide renting your home constitutes a business. If this is decided, they could deny coverage and you would have to pay for your renter’s injuries.
- Suppose a renter damages your home or some of the platform contents. Most policies wouldn’t provide coverage for this. However, even those that normally do might not if the insurance company decides your rental activity constitutes a business.
- Maybe a renter steals something. Homeowners policies typically exclude theft form that part of a residence rented by someone other than the insured.
Before listing your home on a short-term rental site:
- Check with your insurance agent and find out how much rental activity your insurer will permit before considering it a business.
- Find out what coverage the hosting platform (Airbnb, VRBO/HomeAway, and others) offers. Some offer a limited amount for an additional fee.
- Ask your agent if there is extra coverage you can obtain. This coverage would be for anything not covered by your current policy or by the host platform. Some new coverage endorsements have been developed to cover these gaps, but they are not yet available through all insurance companies.
A little research ahead of time could prevent your attempt to earn a few dollars into something that loses even more.