Comprehensive Short Term Rentals and Homeowners Insurance – To Airbnb and Beyond
July 28, 2016
The way people travel has changed dramatically in recent years. Hotels, hostels and staying with family members are no longer the only options. You are now able to temporarily – or even long-term – rent apartments, rooms or full homes from people who, more often than not, are complete strangers.
If you are in the position to consider renting out a room in your home, or even your full home for any period of time, it is very worthwhile to have some important background information on homeowners insurance, because rentals like these could potentially compromise your insurance, thus creating large, long-term issues.
According to the Division of Insurance (DOI), which is a component of the Colorado Department of Regulatory Agencies (DORA), there are five key tips to keep in mind when considering rentals and how these rentals can (sometimes adversely) affect your homeowners insurance.
We have compiled these five, helpful tips for all homeowners who are considering renting out their space in this way!
- Know the risks – because you are acting as a host, should something in your home be damaged or destroyed, you will not be covered under your homeowners or rental insurance because neither is designated to include property damages incurred by property rentals. In other words, because you rented out your property to a guest, those property damages will not be covered by your homeowners insurance or your renters insurance policies.
- Protect yourself as the host – there are different types of homeowner policies, but typically they allow for only very small coverages for any homeowners who are considered to be running businesses from their homes. So, when you rent a room out of your home, you become a “home-based business”, therefore substantially limiting the amount of coverage.
- However, it is important to note that if you do NOT rent out your home often, that you may be considered for coverage for these types of damages or injuries, dependent on your insurance provider.
Depending on your specific rental situation, you may want to consider having a landlord policy because it covers not only your home, but property contents (furniture, home appliances, etc.), structures on the property and loss of income due to building damage, legal fees and more. If you are considering this, please contact your current insurance provider.
- Protect yourself as a guest – If you are a guest but have current homeowners, renters or personal liability insurance, you may be covered for damages you caused on a host’s property. That said, when it comes to Airbnb, the company has reserved the right to assert a claim of its own for any/all damages that were incurred against the property in question.
- Know what insurance is available — Airbnb offers host protection insurance that covers up to $1 million dollars if there has been a third party claim of property damage or bodily injury against you as the acting host. While this insurance is applied to every Airbnb listing in the United States, it only applies after your own primary insurance policy either denies or settles on such a claim. These types of laws can, and do, vary from state to state, so most important is to speak directly with your insurance provider or agent prior to renting out your property to guests.
- If need be, contact the Department of Insurance – The Department of Insurance is a great resource for information on insurance and all insurance related issues, like many of the ones briefly explained above. To reach the National Department of Insurance line, simply call: 1-800-930-3745.
These types of short and long-term home rentals have allowed the world of travel, and the method of doing it, to change. It provides many wonderful options but also poses some serious risks to homeowners themselves. Because we believe that maintaining the safety of both you and your guest(s) is of utmost importance, please read through the tips above and call your insurance provider should you have additional questions. We here at Galfand Berger, LLP are also here as premises liability and personal injury resources to you, and can answer your questions.
Contact our Philadelphia Premises Liability Lawyers at Galfand Berger, LLP
If you or someone you know were injured on someone else’s property, our Philadelphia premises liability lawyers at Galfand Berger, LLP can help. With offices located in Philadelphia, Reading and Bethlehem, we serve clients throughout Pennsylvania and New Jersey. To schedule a consultation, call us at 800-222-8792 or complete our online contact form.