The casual feeling of renting out your property privately or on a website like Airbnb can be deceptive. Find out why your homeowner's insurance policy may not be right for you.
Short-Term Rentals and Your Risk as Homeowner
According to Airbnb, over 4 million Canadians used an Airbnb host to travel within Canada in 2017. The website and mobile app service allows members to use the service ‘to arrange or offer lodging, primarily homestays’ (Wikipedia, 2019). There are over 80,000 hosts nationwide.
It is easy to say that Airbnb has revolutionized the way that Canadians vacation! Property owners in large cities, close to tourist attractions or close to a shoreline are seeing huge advantages to renting out their unoccupied units. Consumers appreciate the competitive pricing and convenience offered by this sharing platform.
Insurance Implications of Short-Term Rentals
When it comes to insurance, a short-term rental is classified as the renting out of a furnished apartment, cottage or home temporarily to others. While the casual feel of your Airbnb listing may not seem like a business, your homeowner’s insurance may consider it to be. This is because you are making money on a dwelling which your insurance company understands as being for 'personal use' only.
Your homeowner’s insurance covers guests under normal, non-commercial circumstances. The insurance policy for your rented property will not be properly designed to protect you against Airbnb-related claims (there is also a difference between insurance for condo owners vs. renters).
Obtaining Proper Coverage
In order to get you the proper coverage, your insurance broker will ask you a series of questions, such as how often you plan on renting to travelers and what monetary value you expect to gain from doing so. From there, your broker will inform you if your home insurance or tenant’s insurance will cover you for liability, theft and other damages, or whether your rental situation qualifies you as a commercial business.
Coverages designed for short-term, sharing economy renters can include:
- Liability arising from someone being hurt on your property.
- Loss or damage to buildings and personal property.
- Intentional acts, criminal acts, or failure to act by a guest.
- Loss or damage to a guest’s property.
Lloyds of London – a London, England-based specialist insurer – released a report that outlines consumers and business’ concerns and perceptions of the sharing economy. Find the full report here. Of those surveyed, 53% say that sharing platforms are responsible if something goes wrong, and 32% say that providers are on the hook. This is as expected. As soon as you start sharing your time, home and belongings, you are going to want something to protect them from harm. Your guests are also expecting you to take care of them during their stay.
Condo owners be aware: home sharing or short-term rentals could be a violation of your condo board’s policies. Be sure to check this out before renting!
If you are renting out your home or cottage for short periods of time, either privately or through a host website like Airbnb, or you are thinking about doing so, reach out to your broker to find out whether you are protected properly!
What does your home insurance protect?
If you are not sure what your home insurance covers, we invite you to talk to one of our insurance brokers today to review your home insurance policy.