These days, the use of short-term hosting platforms like VRBO (Vacation Rentals by Owner), HomeAway, and Airbnb to rent out your property to travelers is extremely common. These platforms allow you to put a second property to use, or you can rent out your primary residence while you’re not there.
But how does insurance work with these properties? Many of those who rent out properties aren’t fully aware of what’s covered and what’s not. Does homeowners insurance function when you’re renting your property? Isn’t there insurance connected to the hosting platform (Airbnb, HomeAway, etc.)?
Below, we’ll explain the basics of what you need to know about insurance and renting out your property to strangers.
Expect Gaps in Coverage
Let’s get down to brass tacks: You should not expect any insurance coverage provided by the hosting agency to cover you completely.
Yes, liability coverage plans provided by sites like Airbnb do provide some coverage. For example, if someone were to have a slip and fall accident while renting your property listed with Airbnb, the liability coverage provided by the company should cover you for medical expenses, and legal expenses were the renters to sue.
However, your property is not covered by this insurance, and neither are several other elements that you’ll want to have coverage for. So, for instance, if someone renting your primary residence were to spill red wine on your white carpet, dent, and scratch up your walls, and rip your leather couch, none of this would be covered by Airbnb insurance. Other hosting platform insurance tends to have a similar coverage policy as well.
Will Homeowners Insurance Help?
The next thought for more people who want to rent is: “Aha! I have homeowners insurance — that ought to cover me, right?”
Not necessarily. First, remember that you’ll need to tell your home insurance agency that you plan on renting in the first place. They’ll need to know beforehand. Otherwise, basically anything you might claim under your home insurance policy (with a renter involved) will almost certainly be denied.
When you do tell them, one of several things will happen.
If you plan to rent just for a few days or weeks, you might be able to have coverage through your homeowner’s policy. Otherwise, your insurance company will likely require what’s called a rider or endorsement as added coverage for the renting period.
If you are renting long-term, you’ll need more extensive business coverage. That’s because consistent renting of your property is considered a business transaction. In this case, you’ll need a business policy. Furthermore, longer-term rentals (six months or more) will require that you have a landlord’s policy to protect yourself, your property, and your belongings. These policies tend to be more expensive than general home insurance policies.
Other Considerations to Make
Finally, remember that there are some other things to think about where insurance and renting your property are concerned. Namely, consider how willing you are to take the risk that something bad could happen to your property?
Even if you are covered by the host agency’s liability insurance, your property is at risk. Even if nothing is seriously damaged, are you okay with cleaning up big mess after big mess? This sometimes happens.
Furthermore, consider your neighbors or your home association if you belong to one. If you own a condo or belong to a home association, you may not be legally able to rent out your property. And in any case, your neighbors may not appreciate it.
Making a Smart Decision
In the end, if you do decide to rent out your property, just be sure that you are fully covered. Finally, always speak directly to your Harnish Insurance agent beforehand so that they are aware of your plans and can make additional coverage preparations if necessary.