Peer-to-peer sharing is claiming a bigger and bigger stake in today’s economy, with no signs of the trend slowing in the future. As fewer people strive for ownership and more embrace ‘collaborative economics’, home-sharing has earned a steady following with sites like Airbnb facilitating short-term rentals. While renting out a home or a spare room from time to time may sound like an easy way to make some cash, beware that this type of side gig still comes with risks. Before you list your property or room, talk to your independent insurance agent to be sure you are covered.
Lawsuits
If you are sued for a guest’s property damages or injuries, the cost to defend yourself in court could be exorbitant – even if the lawsuit is completely baseless. It’s not just your guests whom could sue, either. Imagine being held responsible if a guest caused a fire that also damaged a neighboring condo unit during their stay. Sure, Airbnb provides some liability insurance, but there are multiple exclusions and disclaimers that could leave gaps in your protection. These often exclude coverage for losses and injuries caused by pre-existing issues within the home, such as mold. Furthermore, any damages that exceed the maximum coverage provided by Airbnb could still be your personal responsibility to pay.
Property Damages
What about potential damages to your own home during an Airbnb stay? Whether your tenant hosts a wild party with guests who vandalize your belongings, or a fire ravishes your entire property, there are endless scenarios that could leave you with tens or even hundreds of thousands of dollars in losses. Airbnb offers a Host Guarantee that pays for third-party damages to your host property, but it is not actual insurance coverage, and the company still recommends purchasing your own property damage insurance policy in addition to the Host Guarantee.
Normally, you might file a claim against your homeowner’s insurance for damages to your home or personal belongings, but those claims may be denied when offering short-term rentals on your property. That is because most homeowner’s insurance policies include contingencies that assume you are using your property as a primary residence or for personal purposes only. While some may allow endorsements for a one-time stay in your spare room, you will probably need to purchase business insurance, landlord insurance, or rental dwelling insurance if you are regularly renting out your property on Airbnb.
Is Hosting on Airbnb Right for You?
Before you can host on Airbnb, you first need to check the bylaws of your homeowners or condo association to find out if it is allowed. If you are renting your space, check with your landlord to find out if subletting is allowed. Next, consider talking to your neighbors to find out their feelings about strangers being on the property from time to time. If you are renting a condo that serves as a second home on the beach, there is a fair chance your neighbors are also renting their spaces to guests. If you live in a gated community somewhere in the suburbs, however, your neighbors may feel less comfortable with the idea of guests coming and going. Finally, talk with your independent insurance agent at Krog Insurance to find out how becoming an Airbnb host could affect your homeowner’s insurance coverage and whether additional endorsements or insurance policies may be needed to protect you against possible losses.
