In today’s technologically advanced world, individuals have a unique opportunity to efficiently rent out their homes, spare bedrooms or other accommodations through Airbnb, an online hospitality company.
For travellers, Airbnb is a convenient platform that provides affordable and flexible alternatives to hotels. For property owners and tenants, the service easily connects various rental units with prospective occupants and makes collecting payments simple and secure. For the average homeowner, properties or spare rooms that are otherwise vacant can easily be transformed into a source of income.
Despite its convenience and the potential for profit, Airbnb is not without its risks for those who decide to list accommodations.
Potential Insurance Gaps
If you are considering renting your property through Airbnb, your first step should be to contact your insurance broker to review your current homeowners or renters insurance policy. Relying strictly on such policies while hosting guests through Airbnb can lead to significant gaps in coverage and leave you financially vulnerable.
While your homeowners or renters policy may allow you to rent your property to a guest, it is important to keep in mind that each insurer has its own restrictions and requirements. For example, some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to broaden your coverage.
Standard homeowners and renters insurance policies are designed for personal risks, not commercial use. If you plan to rent out your residence on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy in order to be properly insured. It should be noted that a growing number of insurance companies now offer home-sharing liability insurance policies that can be purchased on a month-to-month basis.
Even more alarming, your homeowners or renters policy most likely won’t consider property damage caused by guests a covered peril. This means you could be left to cover the cost.
Issues with Airbnb-provided Protection
To its credit, Airbnb does offer its hosts two forms of protection through its Host Guarantee and Host Protection Insurance. While hosts may be inclined to rely exclusively on these programs to manage their risks, there are significant gaps related to these offerings.
For more information on specific elements of Airbnb’s Host Guarantee, hosts can review the terms and conditions in full here.
The Bottom Line
While Airbnb offers a unique and potentially profitable service to users, it’s not without its faults. Before you decide to try it for yourself, be sure to consider all of the risks.
Again, you’ll want to minimize potential financial fallout by purchasing the appropriate insurance coverage. To discuss your options further, contact D.I.S. Financial Group today.