Share with Care: Understanding the Insurance Risks of the Sharing Economy

Vacation rental sites have become increasingly popular over the past decade among travelers and property owners. Make sure that you are aware of the potential risks and insurance needs in home-sharing rental situations. 

What if your guest vandalizes your property, damages your neighbor's swing set, or is injured on your property? Both guests and hosts could incur costs if things go astray. As a host, your homeowners or renters insurance policies are not designed to cover accidents arising from property rental and your insurance company may deny coverage for any resulting damages.

How can I protect myself as a homeowner/renter?

Most homeowners policies provide coverage if a visitor falls and is injured. However, it is likely not the case if a paying guest falls in your home, because the coverage may not apply to commercial use of the property. While the top home-sharing companies provide some liability protection, the coverage is limited. To make sure you are protected, talk to your agent about your situation.

Some insurance carriers will offer a rider​ that allows for “occasional" rentals and offers limited property and liability coverage. The problem is limited coverage, and most vacation rental properties have guests “regularly" not “occasionally," so virtually any claim​ could be denied. If you regularly rent your vacation property, then you need business insurance. Once you begin earning income from renting out your home, you are considered a business and your insurer can deny coverage under a standard homeowners policy. A renters insurance policy is subject to the same limitations as a homeowners insurance policy.

A renters insurance policy is subject to the same limitations as a homeowners insurance policy.

If you only occasionally rent a room or your house, your current homeowners insurer might be willing to provide an endorsement to protect you.

Some insurers now offer policies designed for hosts of short-term rentals. If you plan to rent your house frequently or on a longer-term basis, you might consider purchasing a landlord policy (also known as landlord property insurance or rental coverage for landlords). A landlord insurance policy may cover:

• your home
• structures on the property
• property contents you own (such as appliances and furniture)
• lost rental income due to building damage
• defense costs
• liability protection
  

How can I protect myself as a guest?

Hosts might only rent their property to guests who have—and can show proof of having—homeowners, renters, or personal liability insurance.

Your own homeowners, renters, or personal liability insurance policy will generally protect you even as a guest if you happen to cause damage to a host's property. A home-sharing company may reserve the right to make a claim under your homeowners or renters policy for any damage or loss you cause to an accommodation.

Additional Information

Top home-sharing companies typically offer a host protection insurance coverage for third party claims bodily injury or property damage. 

Insurance policies provided through the home-sharing companies only cover liability claims for things like guest injuries on your property and damage to a third party's property (such as a common area or a neighboring house). Damage to your property caused by a guest's actions is not covered, neither is theft of valuables like art, antiques, and jewelry. 

Laws regarding home-sharing vary at the state and local level, so it is important to speak with someone knowledgeable about your location.

Speak with your agent or insurance provider about your risks​ as a host to make sure you are properly covered before you list your property for rent.

How can I protect myself as an on-demand delivery driver?

Call your car insurance company before using your car for work. If you don't have the right car insurance for your delivery work, you could get stuck paying big auto accident bills yourself.

There might be auto insurance provided by the service. Check their website for any coverage. Make sure you understand where the provided coverage ends and begins, and whether there's a coverage gap between their policy and your personal auto insurance policy. 

E-scooters are battery-powered “stand up" or “kick" scooters. They require users to stand and often cannot reach speeds exceeding 15 to 20 mph. Users download a smartphone application from an e-scooter sharing company. The app allows users to find and unlock a nearby e-scooter for a small fee, often just $1. Users can then ride the e-scooter, paying per mile of riding. Since these programs are dockless, once the trip is completed the user parks the e-scooter anywhere that local ordinances permit.

How do I protect myself on an E-Scooter?

An e-scooter company's insurance policy might not cover a user in the event of an accident. Many e-scooter companies also require users to assume all liability arising out of their e-scooter use.

Medical costs to treat injuries sustained while operating an e-scooter are addressed under the injured person's health insurance. If the person was injured while using an e-scooter for work-related purposes, the person could be eligible for worker's compensation benefits.

Whether a user's personal insurance would cover any third-party liability arising out of an accident they caused or contributed to depends on the specific terms and conditions of their policies.

Homeowners: A standard homeowners policy will typically exclude liabilities arising out of the use of a motor vehicle, usually defined as any self-propelled vehicle. Homeowners policies also exclude any liability arising out of a motor vehicle rented to an insured​. Renters insurance will also not cover vehicle-related liability.

Personal Auto: A standard personal auto policy excludes liability coverage for a vehicle with fewer than four wheels – including e-scooters. Motorcycle insurance may not cover scooters that require users to stand.

Umbrella and Excess (Personal)​: Personal umbrella and excess policies offer an extra layer of protection when an insured exhausts the limits of their underlying homeowners or auto policy. Such policies can also provide coverage for perils that are excluded from the underlying insurance policies. For example, unlike an auto policy, a standard personal umbrella and excess policy does not usually exclude vehicles with fewer than four wheels and therefore may provide some coverage for e-scooter liabilities.​

Goods sharing includes everything from tools and equipment to designer dresses and handbags. Goods sharing sites may not offer any type of insurance protection for the renter or rentee of the items.

How do I protect myself while receiving on-demand goods and services?

Before you book your service or order your goods, read the fine print on each platform's website or application, as their insurance and incident coverages vary widely – some offer insurance coverage, guarantees, warranties, and more.

Know who's paying. Are you hiring someone to help with home cleaning, moving, or other tasks through sites such as TaskRabbit? Find out whose insurance coverage applies in different situations. The service may offer a guarantee, but often it is secondary to any insurance or policies the consumer already has in place.

How do I protect myself while offering on-demand goods and services?

Whether you offer pet-sitting services through DogVacay or share items with your neighbors and friends on NeighborGoods, you should be aware that traditional insurance products will not always protect you from the special risks of a sharing program.

Before participating in such an arrangement, you should review your coverage options with an insurance agent to see what additional coverage you need. There may be some limited coverage provided, depending on which personal service platform you're utilizing. Make sure you understand where that coverage ends and yours begins.

Homeowners policies often provide liability coverage for personal items lent to others. However, exclusions may apply if those items are lent out in exchange for money. The exchange of money for the use of personal goods may constitute a business use and exempt any liability coverage from the homeowners policy. If the person renting the items owns the items for their business, liability or property losses may be covered under a business owners or commercial general liability policy. Some inland marine policies may provide coverage whil​e allowing for rental of personal goods.

General liability insurance can be beneficial for dog walkers or house cleaners as it covers third-party bodily injury and property damage.

Professional liability insurance is recommended to other freelancers. This insurance can protect you if a client sues you over the quality of your work.