It is very common for homeowners to rent their homes out for short periods of time (less than 30 days) through short-term host platforms such as Airbnb. It can be a great way to earn money! We see it most often when large events are in town, such as the Kentucky Derby. The majority of such rentals are uneventful but what if something did happen? What if a renter broke a window? What if a renter fell down your steps? What if the renter stole your personal possessions?
Before you become a short-term rental host, you should think carefully about your liability exposure. Here are some key questions to consider.
- Does your hosting platform provide insurance coverage?
Some short-term hosting platforms provide liability insurance to their hosts, others don’t. The hosting site might provide some coverage but please note that this does not take the place of your homeowner or renters insurance. You still need your own coverage.
- Does your homeowners or renters insurance policy cover short-term rentals?
Your own insurance policy likely provides little to no protection when you are renting out your home. When you are renting your home and are receiving monetary compensation, your home would no longer be classified as personal use. Your insurance carrier could claim that you are running a bed and breakfast business and deny coverage.
- Who is liable for renter injury?
Every homeowner or renter policy has coverage for ‘Medical Payments to Others’ if someone is on your property and is injured. However, this coverage could be excluded if you are renting your home and receiving compensation.
Homeowner policies vary from insurer to insurer and from state to state. Before renting your home to anyone, you should read your policy carefully and consult with your agent. Some insurance carriers are now offering an endorsement to help bridge the gaps in coverage. Know your coverage before you rent!