Why Home-Sharing May Not Be Insured By Your Policy…
Travelers using Airbnb and HomeAway look to fully immerse themselves in the culture of a city by sharing the home of a local host, while a host makes some extra cash by allowing a stranger to stay with them. As the popularity of a ‘sharing economy’ increases in our society, it’s important to be armed with all of the facts when it comes to participating in these types of arrangements.
One important consideration if you plan to host, are you protected by homeowner’s (or renter’s) insurance? After looking into the coverage offered by these home-sharing companies, we realized there are gaps and some hosts may not be covered at all.
Typical Homeowner’s (Renter’s) Coverage
Most homeowner’s and renter’s insurance policies do not cover commercial activity in the home. Or renting out your home in exchange for payment. Many homeowner insurance policies exclude coverage for policyholders that run a business from their home, while renter’s insurance similarly includes clauses that allow the insurer to deny claims made by the insured when it involves commercial activity.
Typically insurance policies will cover hosts who have occasional guests, but not for those engaged in renting out their apartments, condos or homes to paying guests. That is why for a landlord or apartment building owner, a separate policy known as a landlord insurance policy is required. This type of coverage does allow for claims involving commercial activity.
Personal property of a paying guest, property stolen by said guest, or damages incurred during a guest’s stay all would likely not be covered under a typical homeowners or renters insurance policy.
The “Home-Sharing” Economy
Airbnb offers their hosts what they call their “Host Guarantee”. It’s true that Airbnb offers a free $1 million liability coverage to its tens of thousands of hosts across the United States. But as the saying goes, “nothing in life comes free” – Airbnb offers their “Host Guarantee” under the assumption that hosts use this guarantee as their “secondary” coverage. So any claims made by a host are pushed through the host’s primary insurance first. Additionally, the “Host Guarantee” doesn’t include coverage for cash and securities, such as stocks and bonds, rare artwork, jewelry, pets, or your personal liability. Evaluating the fine print, Airbnb states in their Terms & Conditions that “Airbnb is not responsible for and disclaims any and all liability related to any and all listings and accommodation.”
HomeAway, which was started in Austin, TX on the other hand urges hosts to purchase primary insurance
for their rental properties, going so far as to offer them a primary insurance solution for their renting activities through CBIZ. This primary insurance offered by HomeAway, called HomeAway Assure, was developed to protect hosts against the hazards of running a vacation rental business. The only problem with obtaining coverage through HomeAway is the potential future costs. For those who bundle homeowner’s insurance with auto insurance, life insurance or umbrella insurance – purchasing commercial property insurance through HomeAway may result in higher costs. By bundling multiple policies, you can save approximately 15% on each policy.
In 2015, a Airbnb Guest Dies in Texas
While on a rope swing, a guest staying in an Airbnb home rental over Thanksgiving died in a freak accident. It is one of two deaths Airbnb has publicly acknowledged. In this case, the victim’s family was compensated by a commercial insurance policy the host had the foresight to purchase. However, hosts should be aware that renting out a home is a risk, guests can be injured and at worst die on a property. What happens next is an inevitable lawsuit and determining who is at fault.
The Right Way to Rent Through Airbnb or HomeAway
Before renting your home through one of these home-share websites, start by thoroughly reading your current policy carefully since homeowner’s (renter’s) insurance may vary from insurer to insurer. If you rent your home occasionally, say for a couple weeks out of the year, your insurer may provide coverage. The best way to know the limits of your coverage is to call your insurance company. Its important to communicate to your agent how often you plan to rent your home, whether you’ll be living in the home while renting, and how many people you’ll be renting to. Your insurance agent can give you the best advice and the appropriate coverage for renting your home. A landlord insurance policy might be the safest alternative depending on your answers to the above questions.
Not a host, but a guest?
We’ve all heard the appalling stories about renting through Airbnb and HomeAway. Guests can also have insurance when it comes to home-sharing. Utilizing travel insurance can protect guests if they incur medical expenses, lose luggage, or experience other losses. Again, your local insurance agent may help you find the best option for you.