Airbnb and Vrbo by Homeaway are two home sharing sites that offer alternatives for hosts to rent their homes for guests to stay in when traveling. Airbnb started when two designers hosted three travelers looking for a place to stay with a few airbeds on a quick site they called, “Air Bed and Breakfast (Airbnb). Vrbo, which means Vacation Rental By Owner, allows travelers to book an entire home or property. Whether you are planning to list a portion or your entire home on a home sharing site or using your home as a short-term rental, it is important to understand how this will affect your homeowner’s insurance.
What does a Standard Homeowners Insurance Policy Cover?
A standard homeowners insurance policy covers your home’s structure (house) and your personal belongings in the event of a fire, wind damage, hail, etc. Homeowners insurance also comes with liability coverage. Liability means legal responsibility for any injuries or property damage to others caused by you, members of your family or household pets. [1] Typically a standard homeowners policy is written based on the idea that you and your family occupy the home.
What if I plan to rent out all or part of my primary residence for a short period of time, a week, or several weekends? According to the Insurance Information Institute some insurance companies may allow a homeowners or renters policyholder a short-term rental. Other insurance companies will require a home sharing endorsement (or rider) to the existing homeowners insurance policy. Contacting your insurance agent or insurance company right away about renting out your home is the safest way to find out what changes, restrictions or requirements are needed to keep your home properly insured.
What if I plan to rent out my primary residence for short periods on a regular basis to various “guests”? In this scenario, this would be considered a business and a standard homeowners insurance policy will not provide coverage for business activities conducted in the home. [2] For some insurance companies, renting your home on a home sharing site is considered a business transaction which means you need a business insurance policy to provide coverage for yourself and your guests. The risks you face with home sharing is much different from the risks you and your loved ones face every day. If you only have a homeowners insurance policy and are renting out your home, any property damage or bodily injury claim you have may be decline and your homeowner’s policy may even be cancelled by your insurance company.[3]
It is crucial to know how homeowner’s insurance applies to renting out your home, therefore, working with an independent agency like Paroubek Insurance is beneficial. Talk to our trusted advisors and get the knowledge and expert advice you need to keep your home protected and properly insured no matter what changes you make with renting out your home.