With the invention of Airbnb, VRBO and other similar services have made it easier than ever before for homeowners to rent out their houses or vacation properties on a part-time or full-time basis. However, renting out your property isn’t without risks. If you decide to rent out your property using one of these online marketplaces, you need to know that you have adequate insurance coverage to protect yourself.
What About Homeowners Insurance?
Many people who rent their homes out using an online marketplace mistakenly believe that their homeowner’s insurance policies will cover all of the risks related to renting out the property. However, this is not necessarily the case. Although your homeowner’s insurance policy may offer some coverage, it will likely come with limitations. Also, some homeowner’s insurance policies may not provide any coverage at all when you list your property for rent online.
Do Online Marketplaces Provide Insurance?
Online marketplaces like Airbnb sometimes provide primary insurance coverage for owners of rental property. However, this coverage includes significant limitations and exclusions. These restrictions leave you open to a number of unprotected risks. For example, if you are listing your property through Airbnb, Host Protection Insurance will provide up to $1,000,000 in liability coverage. However, this insurance will not provide coverage for any losses that are not related to liability. If a guest intentionally destroys or damages your property, you won’t receive any compensation from Airbnb. If you want to replace or repair the damaged property, you will need to rely on other insurance coverage, or you will have to pay the expenses out-of-pocket.
According to Airbnb, homeowner’s insurance policies interact with Airbnb’s Host Protection Insurance differently. To determine exactly how your policy will interact, you must contact your insurance carrier to discuss your situation.
Do I Need a Landlord Policy?
If you are renting out your property on a regular basis, you may need to invest in a rental dwelling or landlord policy. Without this coverage, you may be exposed to additional risks that pose a threat to your livelihood. To determine whether you may need this type of coverage in addition to other insurance, you need to talk to an insurance agent who has experience with risks related to rental property.
Should I List My Property on Airbnb?
Ultimately, deciding whether to list your property on Airbnb is entirely a personal decision, but you should weigh your options carefully before signing any contracts. The insurance implications alone may make your decision easy, but there are other factors to consider as well. For example, if you are a member of a homeowner’s association or condo association, the rules may prevent you from being able to use your property in this way without permission. Likewise, if you have neighbors that don’t rent out their own homes, they may not be happy to see strangers coming and going next door.
If you decide to list your property for rent despite all the challenges, we recommend that you talk to your insurance agent before you begin the process. Please contact Erica Boll Insurance today to make sure you have the coverage you need.