If you are considering renting your property through Airbnb, your first step should be to contact your insurance broker to review your current homeowners or renters insurance policy. Relying strictly on such policies while hosting guests through Airbnb can lead to significant gaps in coverage and leave you financially vulnerable.
While your homeowners or renters policy may allow you to rent your property to a guest, it is important to keep in mind that each insurer has its own restrictions and requirements. For example, some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to broaden your coverage.
Standard homeowners and renters insurance policies are designed for personal risks, not commercial use. If you plan to rent out your residence on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy in order to be properly insured. It should be noted that a growing number of insurance companies now offer home-sharing liability insurance policies that can be purchased on a month-to-month basis.
Even more alarming, your homeowners or renters policy most likely won't consider property damage caused by guests a covered peril. This means you could be left to cover the cost.
To its credit, Airbnb does offer its hosts two forms of protection through its Host Guarantee and Host Protection Insurance. While hosts may be inclined to rely exclusively on these programs to manage their risks, there are significant gaps related to these offerings.
Airbnb backs every one of its bookings with its Host Guarantee coverage at no cost. Airbnb claims that this coverage will reimburse eligible hosts for damages up to $1 million. However, Airbnb readily admits that its Host Guarantee is not insurance and should not be considered a replacement or stand-in for homeowners or renters insurance.
Considerations For Condo Owners And Renters
Multi-unit buildings often have restrictive bylaws, homeowner association rules or lease terms that could impact one's ability to host guests through Airbnb. In many instances, commercial activities like renting out accommodations — even for a short period of time — are forbidden.
While Airbnb offers a unique and potentially profitable service, it's not without its faults. Before you decide to try it for yourself, you'll want to minimize potential financial fallout by purchasing the appropriate insurance coverage. To discuss your options further, call Heritage Insurance today.
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