Perhaps you’ve seen the news stories. A family decides to be out of town during a major sporting event to avoid the associated hassles — crowds, traffic congestion, inebriated fans — and rent out their home for the week on a site like Airbnb or HomeAway. They skip the headaches, enjoy a relaxing vacation, and come home to a nice, fat check. Everyone is happy — the sports fans get more room than they would have in a hotel and save money on meals by using the home’s kitchen. The family gains income that helps offset the cost of the vacation they just took.
The idea of making money off of your home while you aren’t using it can be really attractive. But, let’s face it — not everyone will be as respectful of your home as you are, and even if you have the most courteous visitors, accidents can and do happen. If there’s damage to your home caused by a guest from one of these home-sharing sites, who covers the damages?
As is frequently the case, your first move should be to contact your agent or carrier. If you are a member of a homeowners association, you should check that agreement too — many are now including provisions that prohibit home-sharing, due to the potential for disruption to neighbors.
Renting your home a single time
Your homeowners insurance carrier will likely ask if you are considering renting your home for a single instance, or if you are considering listing with a home-sharing site. For a single instance of renting your home, you might already be covered. Or, your insurer might recommend adding additional coverage through the purchase of a rider. Some insurers will want to be notified in advance if you are renting your home, so make the call to your insurer ahead of time.
Renting your home on a regular basis
Renting your home on a more frequent basis absolutely necessitates a call to your carrier. Your homeowners policy covers your property and your belongings for regular use. Your insurer may classify frequent home rental as commercial use of your home and may require you to purchase a business insurance policy.
Renting your home for an extended time
Another scenario that requires a call to your carrier is if you decide to rent your home for an extended period. For example, if you accept a six-month employment assignment at one of your company’s global offices, and you plan to return — but, the idea of paying a mortgage while it sits vacant isn’t ideal — your carrier may want you to take out a landlord policy in this situation.
As noted above, your carrier might ask if you are listing your home with an established company that coordinates and facilitates this type of home-sharing arrangement. Some home-sharing companies, offer policies. For example, Airbnb’s offering is called Host Protection Insurance, and VBRO suggests that home renters require guests to purchase Damage Protection coverage. This insurance would act as the primary coverage in the case of damage or other claims.
Finally, it’s important to note that your homeowners policy will likely have exclusions for damages, injuries, or theft caused by someone renting your property.
The sharing economy has changed the way we do many things in the U.S., from getting a ride to finding a place to stay on vacation. The idea of earning income on something we already own can be very enticing, but it carries risks. The best protection is to make sure that you understand your policy and carry coverage that meets your individual situation.
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