What Kind of Insurance Do You Need to Rent Your Home on Airbnb?
Everyone who owns a home in Long Beach right now is devising a plan on how to cash in on the Olympics taking place on their turf. Only time will tell what kinds of businesses the City of Long Beach will allow, but residents may not even need city permits to make a profit. Some people plan to rent out their homes for those summer months. Not only will renting out their homes on Airbnb or HomeAway allow them to avoid the inevitable traffic jams, but they can charge high prices with hardcore Olympics attendees who now have an option other than a hotel stay. Perhaps you have a similar situation in which your condo or house could be a cash cow!
Airbnb Host Protection Insurance (HPI)
Airbnb provides what they call a Host Protection Insurance (HPI) which is to supercede a homeowners insurance policy and renters insurance. It provides up to $1 million liability coverage to hosts, landlords, etcetera. This protection is included each time you book a tenant. Basically, if anyone files a lawsuit against a host for bodily injury or property damage, they are covered. It also claims to cover parts of the common areas, like lobbies. Landlords and homeowners associations are also covered if a guest is injured or if the guest causes property damage. Exclusions are damage due to pollution and mold as well as injuries caused intentionally (not accidents) like assault and battery or acts of terrorism. This coverage is available in 15 countries.
Important Limitations on Airbnb’s Host Protection Insurance (HPI):
- You won’t be reimbursed unless you try to settle the bill first with your guest.
- If the damage occurred before or after the booking period (even one minute prior or after), you are not covered.
- The damage must be reported within 14 days
- You’re not covered for damage to your own personal property.
- You’re not guaranteed if your guest causes damage to common areas and the association or landlord sue you. If it is covered, you’re only covered up to $1 million. The rest is on you.
One thing that’s great about HomeAway is that their insurance, called Assure, is a no-brainer. It’s meant to replace your existing homeowners insurance policy. Yes, that means you can be insured for dual purposes at once. It also covers damages to the building and your contents, caused by guests or otherwise. Loss of income coverage and liability coverage in the event of a guest’s injury or death are included and so is coverage extended to amenities on the property.
Does My Homeowners Insurance Cover Me if I Host?
If you do not report that you are using your home for commercial purposes not only do you risk not being covered if someone is injured or dies on your property, you will also not be covered for physical damage. What’s even worse is that your insurance company may cancel your homeowners insurance policy. It’s not that you’re not covered for having a guest one time. You’re not covered if you didn’t notify the insurer ahead of time. You’re also not covered if you rent out all or part of your property more than once because it is then treated as a commercial property or business. No, twice is not not good enough. Once is all you get.
What if I Want to Rent Out My Home More Than Once?
Since nearly all homeowners insurance policies have stipulations about using part or all of your home for commercial purposes only once, it’s best if you consider keeping everything above board, especially when it comes to your biggest asset, your home. Most insurers offer a hotel, vacation rental or a bed and breakfast policy. You’ll still need to have a standard homeowners insurance policy as well. You may even be able to find a policy that allows you to buy coverage on a month-to-month basis. Speak with a reliable insurance agent if this is a route you see yourself taking.
The Pros and Cons of Business Insurance for Renting Out a Home
- Business policies are generally much more expensive than a standard homeowners insurance policy.
- Even if you buy a commercial property to rent out a home, you are often not covered if your guest steals or damages any parts of your property. Nor will you be covered if your guest’s property is stolen or damaged.
- You will not be covered if your guest causes injury or property damage to a third party.
- Some policies will not cover common areas in a condo.
- If you rent out your property full time for an extended period of time, this type of policy won’t suffice. You’ll need a landlord or rental dwelling insurance policy.
Does My Homeowners Insurance Cover Me When I Stay at an Airbnb?
Yes, as a guest you’re covered for short-term rentals on your personal homeowners or renters insurance policy. What that means is that your belongings are covered and so are you if you accidentally injure someone. And as for renters insurance, your personal belongings are covered in an airbnb rental just as they would be if they were stolen out of your car.
In order to be covered for certain items, however, they must be listed on your policy (i.e a laptop, golf clubs, etcetera). You’ll even be covered outside of the country.
Other Home-Sharing Tips
- Make sure to have a line-by-line inclusion of everything you want covered and discuss your needs with an agent. If you don’t have a reliable agent now, we can help you shop homeowners insurance and business insurance agents who can give you the guidance you need. Just visit here or call: 855.214.2291
- Make sure you choose guests wisely. Use a screening service if you can and do a thorough background check.
- Always ask for a sizeable deposit. Not only will it ensure that your damages will be covered but it’ll also be incentive for your temporary tenants to take care of your place as if it were their own.
- Don’t lie to your insurance carrier about anything you plan to do. Getting dropped and having a hard time getting insured again are not worth short-term gains.
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