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.
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.