Considering renting out your home with a home hosting platform like Vacation Rentals by Owner (VRBO), Airbnb, or HomeAway? Have you considered how you’ll handle insurance?
Consider this cautionary tale:
Hillary and John rented out their home in Lake Geneva, WI on Airbnb while they went on their own vacation for a few weeks. Thinking the Airbnb insurance included in their contract would cover them if anything unfortunate were to happen, they decided against notifying their insurance company or purchasing any additional form of coverage.
Upon returning, they found their home in complete disarray. Stains were on the carpet, chairs, and couch. Their television and stereo had been stolen, and there was a hole in the window where rain had come in.
When Hillary and John contacted Airbnb about the damage to their property, they were astounded to find that the Airbnb Host Protection Insurance they had been counting on would not compensate them. In fact, they found, this insurance only covered liability claims — not anything to do with the coverage they needed in this tragic situation.
Sadly, situations like Hillary and John’s are all too common. While companies like Airbnb will play up their Host Protection Insurance plans, these policies only cover liability claims. For example, if someone falls and breaks a rib while staying in a host’s home, then tries to sue the owners, liability coverage could be of assistance.
However, damage to property or stolen property is not something that most hosting platform insurance will cover. And this is what most homeowners need in order to ensure their financial security.
Homeowners Insurance to the Rescue?
Not quite. Many renters on sites like Airbnb don’t purchase additional insurance for rental periods even when they’re aware that Host Protection Insurance won’t cover home or property damage. That’s because they assume that their homeowner’s insurance will take care of any gaps in coverage.
This is not true. Homeowners insurance is set up by insurance companies to take care of your home and your belongings while you and your family are living on the property. When strangers enter the picture, homeowners insurance does not provide the same coverage.
In some cases (for example, if you plan on a one-time-only rental), it’s possible that you can speak with your home insurance company and request coverage for the rental period. Some companies may work with you and offer you short-term extended coverage. But most of the time, your insurance agency will ask that you purchase a rider to provide added coverage.
And with longer term rentals, you’re out of luck with getting help from a standard home insurance plan. Nearly all insurance companies will ask that you purchase brand new coverage plans to make up for the gaps in coverage.
Seeking Additional Coverage With Your Insurance Company
Still want to follow through with renting out your home? The best course of action at this point is to make an appointment with your insurance agency and figure out what additional coverage you’ll need.
For example, business coverage may be something you’ll need to purchase. In fact, an increasing number of states are requiring business insurance for hosts or renters on hosting platforms like Airbnb and HomeAway. That’s because the activities hosts are taking part in qualify as business activities. Moreover, you may be required to purchase landlords insurance, and becoming a landlord comes with its own set of legal and formal requirements.
The bottom line here is that all situations involving renting your home out to strangers will require unique insurance coverage. There’s no one-size-fits-all solution. For this reason, make an appointment with your insurance agency today.
At Glass Insurance, our highly-qualified agents can sit down with you any time to discuss your options. Call us today, or stop in at your convenience.