Home sharing
In today’s economy, home sharing typically involves short-term rental arrangements in which homeowners provide places for guests through platforms such as Airbnb or HomeAway. It can be a great way for those with underutilized homes to generate extra income and for guests to stay in convenient locations at reasonable prices. However, those without proper insurance coverage could find themselves in tighter spots than they bargained for.
Innovations like insurance and endorsements have made home sharing more convenient and less risky for all parties involved. Whether you participate in home sharing as a homeowner who hosts others or as a guest at a host’s home, be sure you understand how to protect yourself. Here’s what you need to know.
Hosts
According to the National Association of Insurance Commissioners (NAIC), homeowners insurance policies typically allow policyholders to house borders on occasion — but “occasion” is subject to interpretation. Home sharers may also need more extensive personal liability insurance than typical homeowners policies provide. For added protection, landlord policies can help cover homeowners against risks including property damage, personal injury, legal fees, and lost rental income.
No matter the hosting frequency, however, listing a property on a home-sharing platform could result in the property being legally defined as a home-based business, which homeowners insurance policies usually exclude. In response to the sharing economy, some insurers have introduced endorsements and new policies. It’s no longer necessary for many homeowners who use sharing platforms to buy commercial insurance, which is costlier than special home-sharing policies.
Regardless of the coverage home-sharing services themselves offer, many platforms invoke dispute-resolution processes if guests cause damage to home sharers’ property. Hosts can receive reimbursements from these services via checks in the mail, and the home-sharing services’ insurance companies subrogate against responsible parties, sparing hosts time, frustration, and claim filing.
Even with these protections in place, however, and even if you’re renting your home to guests only a few days a year, it’s worthwhile to discuss such an arrangement with your insurance agent to mitigate risk.
Guests
Those who use home-sharing services as guests also have a few things to consider. Guests injured at short-term rental properties may be responsible for their own medical expenses if the companies they book their rentals through or their hosts don’t offer medical payment coverage. Similarly, guests who inadvertently damage their hosts’ property may have to pay out of pocket if their own homeowners, renters, or personal liability insurance policies don’t extend to cover their short-term rental occupancies.
How much could they be on the hook for? Homeowners policies commonly provide up to $1,000 in liability coverage for damage policyholders cause to other people’s property. Some guests might feel comfortable with that level of coverage, but others prefer to be better prepared in the case something were to go awry — even through no fault of their own — while they’re renting others’ homes.
To protect yourself, check with home-sharing companies before booking to see what liability coverage they require on their hosts’ properties. It’s also a good idea to speak with your insurance agent to verify your coverage levels and ask about options for increasing your coverage if necessary.
While home sharing can be a profitable and convenient opportunity for many homeowners and short-term renters, it’s a new industry for which some insurers are still working out some kinks. If you decide to try it out as a host or guest, a wise first step is to talk with your insurance provider.
