Today more than ever, it’s become commonplace for vacationers and business travelers to forget hotels and motels and choose home rentals instead.
For a cheap place to stay, choose a bedroom in a house. For a more luxurious, condo-like experience, rent an entire cottage or home for several days or weeks. As renters, the deal is good. But what about the people renting their properties?
Many homeowners choose to rent out their private residence while they’re out of town to make a little extra cash. Others have second or third homes that they opt to rent out. Generally speaking, if all goes well, it’s a great option.
But what if all doesn’t go well?
That’s what insurance is for, right? Well, unfortunately, under some circumstances surrounding home rentals, insurance won’t help you. Even if you use the insurance provided by sites like Airbnb and even if you have homeowners insurance, you still may not be covered if an accident occurs in your home while you’re renting it out.
The answer to the question, “Should homeowners be wary when renting out their homes on platforms like Airbnb or VRBO (Vacation Rentals by Owner)?” is, unfortunately, yes.
Below, we’ll discuss why.
Why You Might Want to Reconsider Renting Out Your Home
- Home sharing agencies have insurance, but it doesn’t cover everything.
What’s most crucial when it comes to home sharing is making sure you’re covered in the event of an accident or emergency. Most home sharing sites charge added fees that cover their particular form of insurance.
For example, Airbnb has “Host Protection Insurance,” which covers you if someone is injured in an accident on your property. For example, if someone slips and falls on a rug, you’ll be covered. If, however, your personal property (appliances, furniture, etc.) is damaged, this insurance does not cover you.
- Home insurance usually won’t cover you. You may need business or landlords insurance.
Most homeowners will look to their home insurance next — will this cover me in the event of an accident?
For the most part, the answer is no. Many cities and states are now requiring that if you rent out your home (all or part of it), you’ll need business insurance as this is a business transaction. Furthermore, depending on the length of your rental period, you may need landlords insurance.
- Some condo and home associations don’t allow home sharing.
If you live in a condo or home association, be sure to check with association managers and read the fine print in your contract. Some associations won’t allow home sharing or renting.
- Your neighbors may not appreciate it.
Even if your condo or home association will allow you to rent out your property, take a moment to consider your neighbors and community members.
People who rent homes are on vacation. As such, they’re relaxing, partying, and because they don’t live there permanently, they’re usually giving little thought to how they act while they rent from you. For others who live permanently around your property, this may be an annoyance that they’ll take issue with.
- When there’s a mess, you’ll be left to clean it up.
Finally, consider the mess that will inevitably be caused by renting your home. On top of the added insurance expenses listed above, every time someone rents your property, you’ll have to clean up after them. Rent a property out six or seven times in a month, and you’ll be cleaning your property six or seven times that month.
Speak to Your Insurance Agent Before Making any Plans
The only way to know for sure that you are completely covered when renting out your permanent residence or another property with a home sharing platform is to speak directly with your Liddicoat Insurance Agent. We would be happy to sit down with you and review your plan any time.