With the continued popularity of platforms like Airbnb, it’s important that to address some questions that you may have regarding the insurance implications of renting out your home.
Renting your home can indeed be lucrative, but it’s essential to understand that your standard homeowners insurance policy may not automatically cover home-sharing activities.
Here’s what you need to know to protect your property and yourself:
- Homeowners insurance generally covers damages caused by fire, wind, and other natural disasters. It also offers personal liability protection if someone gets injured on your property.
- Short-term rentals are usually excluded from standard homeowners insurance. This means if a renter damages your property or gets injured while staying in your home, your homeowners policy won’t cover these incidents.
- Home-sharing is typically considered a business activity. Regularly renting out part of your home to generate income is considered business activity, which is not covered under a standard homeowners policy. You’d need business insurance for this.
Options for Coverage:
- Insurance Riders – Some insurers allow you to extend your homeowners coverage for a short-term rental if it’s a onetime event and you notify them in advance. This type of coverage may be limited to only cover objects in the home, depending on the insurer. Other insurers may require a specific endorsement or rider.
- Additional Liability Insurance – Some states require additional liability insurance for short-term rentals. For example, Massachusetts mandates $1,000,000 in liability coverage. If you use a hosting platform like Airbnb or VRBO, you may want to check if their insurance meets these requirements. If it does, you may not need to buy extra coverage. I’m available to discuss specific insurance rules for your state’s requirements.
- Specialty Policies – There are options for short-term rental insurance that cover the unique risks posed by home sharing.
For Renters:
- If you’re renting and planning to sublet, check with your landlord and review your renters insurance policy. Typically, renters insurance doesn’t cover subletting, and your sublessee will need their own insurance.
Ensuring you have the right insurance can save you from significant financial and legal headaches. Before diving into home-sharing, feel free to reach out about what your current policy covers and what additional coverage you may need. As always you can reach us by text, email, phone, or a good ole fashioned stop by our office!