Clearing The Air On Home Sharing
If you’ve got a vacation home, chances are good you’re not the only one who’d like to vacation there. Whether it’s a gabled Cape Cod in the Hamptons, a cozy log home in Aspen or an airy retreat overlooking the ocean in Kauai, renting out your second home can be a smart way to offset a portion or even all of your ownership costs.
The developing sharing economy and sites like Airbnb and HomeAway make it easier than ever to list your property and find eager renters. But there is an important question to ask before you start sharing your home with strangers: will you be sharing liability, too?
Airbnb’s Growth As A Hotel Substitute
Homeowner’s insurance typically covers mishaps when someone is visiting your home. But add in a commercial element—money changing hands—and the fact that insurance companies don’t yet have years of data to predict incidents, and you’re looking at quite a gray area.
Airbnb and HomeAway both offer some coverage. Airbnb has provided $1 million in liability coverage to U.S. property-listers since early this year, and changed its rules as of October 22, 2015 so that coverage is primary instead of secondary to the lessor’s other policy. HomeAway offers its homeowners the opportunity to purchase insurance through its HomeAway Assure program.
Even with those options, though, your best bet is to do some additional thinking and investigating before you rent. Will you have limits on numbers of inhabitants? A sweet, middle-aged couple from England is likely to do less damage than three carloads of Spring Breakers. How often might you be renting? Your regular homeowner’s policy may be adequate if the number of rental days is low enough.
You’ll also need to come up with a realistic valuation for your home and its contents. This is where a good insurance agent can be a big help, both in helping to value your belongings and steering you toward the best insurance products to meet your needs. Working together, you can look through the options and make an informed decision with the agent’s expertise to help guide you.
Perhaps the most important step is to read the fine print on your insurance policy before you start renting out your property. Nearly all policies include exclusions. Make sure you can live with yours. If not, you may decide that renting isn’t for you—at least not yet. As with any developing industry, change comes quickly, and the coverage you want may be available in a matter of months.
Kelly Klee is pleased to work with you to ensure that your assets remain intact if you enter the vacation-rental arena. Our highly rated insurance companies offer a variety of liability options to give you peace of mind. Contact us at (844) 885-1600 or click here to send an email with your questions.