Pat yourself on the back for being one of the many people capitalizing on the popularity of today’s sharing economy!
However, before you get too giddy about the additional income you’ll be making from your living space, you want to make sure you’re adequately insured, should an accident happen when guests occupy your Airbnb rental.
Airbnbs occupy the murky, grey area in property definitions, as neither is solely a private residence or a commercial property. When you register your property with Airbnb, you’re automatically covered by their insurance, which covers up to $1 million in damages for personal injury or property damage claims; however, you’ll need more coverage than this.
While it’s excellent that Airbnb automatically provides its hosts with Host Protection Insurance (HPI), navigating through exclusions can be tricky, especially when they are subject to change. Another item to be aware of is that Airbnb’s HPI only covers the period of the guest’s contracted stay, so if a guest arrives early — or leaves late — and gets injured, you’re out of luck.
While standard, you should know that your homeowners insurance policy more than likely does not cover liability for the commercial use of your property, a la Airbnb rentals. If you’re the gambling type, most insurance companies will allow up to 30 days of residential home rental per calendar year, make sure you call your agent to notify them beforehand.
However, if you’re renting out year-round or for more than a single occasion, you want to get a policy that adequately covers you, as your house has crossed into business use territory.
House sharing and renting year-round
If you’re renting your living space for more than 30 days a year, you may want to look into commercial insurance. If your home is being used as a business property to generate income, you’ll need to insure it as such.
While policy coverage may vary, commercial or business property insurance policies typically cover the physical property or structure, property damage, and personal injury liability. Some business property insurance policies also include loss of income, should your property be destroyed.
If you’re renting to one party for extended periods, you’ve crossed over from business or commercial insurance coverage territory to landlord insurance. While more expensive than homeowners insurance policies, landlord insurance offers additional protection.
A landlord insurance policy may cover damage to personal property, such as any appliances you leave in the home for tenant use, structural damage, in case of fire or storm, personal injury liability, in case someone gets hurt on your property, in addition to loss of rental income in the event you are unable to rent out the property due to damage.
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