Hosting on AirBnB has become a popular way to make extra income for homeowners and renters. However, it is important to understand that there can be insurance coverage issues if you are renting your home out on a short-term basis. While it is always a good idea to discuss with your insurance advisor, we have put together some tips on how to handle the insurance coverage if you are an AirBnB Host.
1) Let your insurance agent know that you are renting out your home on a short-term basis.
Whether you live in the home and rent out a room or rent it out entirely, there are insurance implications for home rentals. If your home is insured on a standard homeowner’s policy, they may exclude coverage for renting out your residence. This means that you could find that your carrier will actually decline your claim when they find out you’re actually renting your home and still insuring it as a primary residence, because it can be considered a business exposure.
2) Take a look at AirBnB’s Host Protection Insurance and contact them directly for detailed questions on the coverage.
AirBnB provides a brief summary of what insurance coverage they provide on their website. Their coverage is a liability policy up to $1,000,000 for claims arising from third parties for bodily injury or property damage. This means that if guests are injured during their stay, AirBnB should provide coverage up to these policy limits.
However, there are some coverage gaps to consider. First, personal property of the host does not appear to be covered on the Host Protection Insurance policy. They also do not provide coverage for Personal Injury, which includes slander & defamation. Property issues are also not covered, meaning if a guest finds that you have bed bugs and alleges a claim against you because of it, you could be on the hook for this.
3) Insure your home with a dwelling insurance policy meant specifically for short-term rentals.
These policies generally provide coverage for your personal property, property damage to your residence, as well as liability coverage. Many standard dwelling policies assume that the renter will be an annual lease as part of a standard rental agreement. For AirBnB hosts, this can pose a problem if they are not aware what their policy language states. Check with your insurance advisor if you have questions and make sure your carrier is aware that you rent your home out on AirBnB.
4) Carry an umbrella policy – and make sure it provides coverage for you over your underlying policies.
Umbrella policies are excess liability policies above and beyond any homeowners, automobile, and rental insurance liability coverage that you carry. It is easy to exhaust $1,000,000 in a lawsuit and umbrella policies provide you extra protection and coverage for defense costs that can come in handy if a lawsuit is alleged against you, even if the lawsuit is frivolous (you can find more about that here). It is also important to check that your underlying policies are covered under your umbrella. Umbrella coverage may not extend beyond AirBnB’s Host Protection Insurance.
If you are considering becoming an AirBnB host or already rent out your home and have questions on your insurance, contact us today for an insurance review to ensure that you are properly covered.