Renting out part of one’s home is a popular way for homeowners to make extra money during mega events in their local area, or over an extended period of time. While the home sharing market is quickly growing due to companies like AirBnB, one thing that homeowners must consider is their insurance – specifically, their homeowner’s insurance. Homeowner’s insurance protects the structure of the home, personal possessions, the cost of living elsewhere during repairs, and liability to others in case of damage to one’s property or others. But, homeowner’s insurance does not cover the costs of renting out part of one’s home to paying guests. Learn how renting and homeowners insurance interact.
Additional Insurance Policies
Some insurance companies require hosts to add a policy on their existing homeowner’s policy, while some might accept the additional host protection insurance from the external home sharing company. These additional policies can vary from situation to situation.
One Time Events
If the host is intending on renting out the space for a onetime event in their area, their preexisting homeowner’s insurance might already cover the costs of renting. Some insurance policies do require advance notice. Even if a potential renter thinks their homeowner’s insurance policy covers renting for a one-time event, they should still call the insurance company to be sure. Insurance companies might require one to purchase an add-on to the pre-existing policy, so as to give more coverage to the renter.
Long Term Renting
If a homeowner decides to rent out their home for an extended period of time, insurance companies might consider it a new business. If that is indeed the case, then the homeowner needs to purchase a form of business insurance. In the case of renting out for a period of six months or longer, the homeowner should ask their insurer about purchasing a form of landlord insurance.
Coverage
Homeowners should be aware of what their policy, both in a one-time-rent scenario and a long-term renting situation, does and does not cover. Most homeowner’s insurance policies protect personal possessions (of the owners), structure of the home, cost of living elsewhere during repairs, and liability to others. There are several common situations that under most homeowner’s insurance policies are not covered.
- Property of a paying guest is usually not protected. Instead, paying guests should get their own personal renter’s insurance or homeowner’s insurance policy to protect their belongings.
- Stolen property is an exception to the theft protection that most policies offer. If the thief is a paying guest then the insurance company will not cover it after the renting time period begins.
- Guests injuring someone or damaging a neighbor’s property are not covered under a typical homeowner’s insurance policy. If a paying guest is injuries someone or damages something then the guest would need rely on their own renters or homeowner’s insurance for liability coverage.
- Damage to the homeowner’s property by the paying guest is not a part of most policies. Most homeowner’s and renter’s policies exclude property damage to rental properties. This is why it is important for homeowners to ensure that guests are able to pay for any potential damage they might cause within or around the home.
External Insurance
There are cases where insurance companies might not explicitly require homeowners to have additional policies. Even in these cases, homeowners should still have some form of protection. Many hosting services companies have Host Protection Insurance available for purchase. AirBnB’s policy behaves like a primary insurance policy, provides liability coverage to those who host, and in certain situations, to their landlords. This is a policy that gives homeowners some protection, but it is simply through the home sharing company rather than the primary insurance company.
The home sharing market is now easier than ever to enter. Those homeowners who are considering renting their homes need to protect themselves with a high quality homeowner’s insurance policy or a business insurance policy. TJ Woods’ team of experienced professionals can find a policy that suits each individual’s renting situation. Contact us and get a free quote today!
