While hotels and resorts have been the standard vacation lodging options for many years, today, an increasing number of travelers are choosing rooms and apartments from sites like Airbnb, HomeAway, VRBO (Vacation Rentals by Owner), and FlipKey.
Unlike hotels and resorts, these hosting platforms catalog and advertise all types of accommodations from millions of property owners. They also organize reservations, take and process payments, and ensure follow-through of both the renters and the hosts.
So what does it take to be a host with a site like FlipKey or Airbnb? For the most part, the process is fairly simple. You’re in the best shape if you own the property and have either yourself or someone else you trust nearby for things like check-in, cleaning, and other inquiries from renters.
But what remains is the question of insurance coverage.
Namely, you should be asking the following insurance-related questions:
- What coverage do you have through hosting platforms (Airbnb, VRBO, etc.)?
- What happens if someone is injured while they’re staying on your property?
- What happens if your property or building is damaged while a renter is staying in your home?
- Will homeowners insurance cover rentals?
What You Need to Know About Home Rentals and Insurance
It’s true that usually, some form of insurance will be provided by your hosting platform. But when you read the fine print of your Airbnb Host Protection Insurance plan, for example, you’ll quickly see that only some types of accidents are covered. With Airbnb insurance, liability protection is provided. This means that you’ll have financial protection of up to $1 million USD for any liability claims that are made against you. If someone were to hurt themselves swinging in your backyard hammock while renting from you, for example, you’d have protection against their claim.
On the other hand, property damage (probably a more common issue with home rentals) is not covered by Airbnb’s Host Protection Insurance. Therefore, if someone were to break all the appliances in your kitchen and steal your television, you’d be out of luck.
Homeowners insurance will not cover home rentals most of the time either. Generally, you can expect your home insurance provider to decline any claims you make while renting out your home. That’s because your insurance policy only works when it’s providing coverage for you and the other permanent residents of your home.
Renting brings about added risks for insurance companies, so they’ll usually demand that you purchase different types of additional insurance to cover the gaps. Normally, this means purchasing rather expensive landlords insurance.
Other considerations you should make before committing to rent out your home for payment include:
- Home Association Barriers: Most home associations have bylaws that prohibit subletting.
- Possibly Cleaning Issues: You’ll need to clean before and after each renter or pay someone to do this for you.
- Neighbor Concerns: It’s respectful and wise to ask your neighbors how they feel about you renting out your home. Often, neighbors become unhappy with rental homes that seem to have revolving doors for stranger after stranger.
Speak to an Insurance Agent About Your Options
Still considering renting your home out? Your best course of action is to speak with an insurance agent to make sure you have comprehensive coverage. Even though most rentals are uneventful and without incident, when a tragic event or severe destruction does occur when you’re renting out your home for payment, only full-coverage insurance can protect you from severe financial and legal problems.
Our insurance agents at Lillie-Couch Insurance would be happy to speak with you at any time about important insurance decisions as they relate to renting your home. Give us a call today or stop by at your earliest convenience to discuss your options.