The rapid expansion of the so-called “sharing economy” is changing the accommodations industry. In recent years, there has been a significant proliferation of home-sharing properties for internet-based rentals via websites such as Airbnb, VRBO, and others.
People across the world are increasingly choosing these short-term home rentals when they travel, either for vacation or business, as an alternative to generic hotels.
A variety of major short-term rental players now offer over one million listings each, and the market has attracted a great deal of investment. It has also become a way many real estate owners are generating income of their own by renting out either portions of their homes or entire homes for travelers and vacationers.
It’s important to understand that your typical homeowner’s insurance policy will not be adequate if you’re engaging in home-sharing. In fact, many insurance companies will not cover homes that are rented out for short-term home-sharing. Others may offer policies but will tailor them to how many days per month the home is used for home-sharing.
If you engage in home-sharing at a property you own, you may be at some legal risk if you have an incorrect insurance policy. For starters, there’s the risk of damage or vandalizing by guests, which may put you on the hook for repairs. If a guest is injured in your home, you may find that you are responsible for that person’s medical bills, or even wider lawsuits. It’s unlikely you’re prepared for these scenarios.
When travelers pay to stay in a home you own, they aren’t covered as your invited guests would be by your existing homeowner’s policy. Once money changes hands, your home becomes a business, and it’s unlikely that your existing insurance policy covers commercial use.
You could solve the problem by renting your home only to individuals who are proven to be carrying their own renters’ policy, but this is an awkward way to conduct a home-sharing business, and it would surely shrink your potential pool of renters.
A better solution is to make an appointment to speak with your insurance agent and inform them you’re planning to open up your home (or another home you own) to short-term rentals. Your agent will likely suggest that you purchase a landlord policy. This is a type of insurance policy that will cover the structure of the home, the property inside (such as furnishings and appliances), lost rental income in the event of damage, legal fees, and liability claims if someone gets hurt in your home.
To make sure you have the right type of insurance coverage in place for home-sharing, contact an independent insurance agent who can help you build a policy that will protect you and your paying guests. In Connecticut, Petruzelo Insurance offers personal and business policies that fit your needs and protect your home and business. Call us at 866-479-3327 or visit our website for more information.