What Homeowners Should Know About Insurance Before Renting Out a Home on Airbnb or Vrbo This Summer

As a homeowner, renting your home out on platforms like AirBnB or Vrbo can be a fantastic way to generate extra income, especially during the summer.

However, before taking this leap, it is essential to understand the insurance implications and the financial protection you need to safeguard your property and personal belongings.

Understanding the Basics of Homeowner’s Insurance

Before delving into the specifics of home-sharing and rental insurance options, it’s crucial to first understand the basics of homeowner’s insurance. This foundational knowledge will equip you with the necessary background to make informed decisions about the additional coverage you might need when renting out your home.

Let’s first examine what your current policy likely covers and explore how typical home insurance may interact with home-sharing activities.

What Does Your Current Policy Cover?

Your homeowner’s insurance policy protects your property against damage and you against liability for accidents that injure other people or damage their belongings. However, most standard homeowner’s insurance policies do not cover short-term rentals.

Renting Out and Homeowner’s Insurance

When you rent your home, even on a short-term basis, it may be considered a business activity, which is usually not covered under a standard homeowner’s insurance policy. Therefore, if a renter is injured on your property or your property is damaged during the rental period, you may be financially responsible for the cost.

Navigating AirBnB and Vrbo Insurance Options

Renting out your home through platforms like AirBnB or Vrbo isn’t just about creating an appealing listing. It’s also about understanding the insurance coverage these platforms offer. AirBnB and Vrbo have distinct insurance programs to provide some level of protection for hosts.

In this section, we’ll dive into these programs to help you understand what is covered, what isn’t, and how these protections interact with your existing homeowner’s insurance.

AirBnB’s Host Protection Insurance

AirBnB offers a Host Protection Insurance program, which provides primary liability coverage for up to $1 million per occurrence in the event of a third-party claim of bodily injury or property damage related to an AirBnB stay.

Vrbo’s $1 Million Liability Insurance

Like AirBnB, Vrbo also offers homeowners up to $1 million in liability insurance to protect against personal liability claims, such as a guest getting injured during their stay or causing damage to neighboring properties.

The Limitations of AirBnB and Vrbo Insurance

While these insurance offerings may seem comprehensive, they do not cover personal property, loss of income, or certain types of liability. They also have specific exclusions, limitations, and conditions that can leave gaps in coverage.

Additional Insurance Options for Homeowners

While the coverage provided by platforms like AirBnB and Vrbo is certainly beneficial, it may not offer comprehensive protection for all possible scenarios. Therefore, it is important for homeowners to consider other insurance options that can provide additional coverage where these platforms leave gaps.

This section’ll explore several of these supplementary insurance solutions, including home-sharing endorsements, commercial property insurance, umbrella policies, and the value of consulting with an insurance agent.

Let’s delve into these options to secure your assets better when entering the home-sharing space.

Home-Sharing Endorsements

Some insurance companies offer home-sharing endorsements that can be added to your current homeowner’s insurance policy to cover short-term rentals. These endorsements can fill in the gaps left by your existing policy and the coverage provided by the hosting platform.

Commercial Property Insurance

You may need a commercial property insurance policy if you frequently rent out your home or plan to do so for extended periods. This policy provides coverage similar to a homeowner’s policy but is designed for rental properties.

Umbrella Insurance Policy

An umbrella policy is a form of liability insurance that can supplement the basic liability coverage in your homeowner’s and host protection insurance. This can be beneficial if a guest sues you for damages exceeding your primary policy’s limits.

Working with an Insurance Agent

As a homeowner planning to rent out your property on platforms like AirBnB or Vrbo, navigating the maze of insurance options can be daunting. Working with an insurance agent can considerably ease this process, offering invaluable insights tailored to your situation.

Insurance agents bring a wealth of knowledge about diverse insurance products and how they can best apply to your home-sharing situation. They are skilled in demystifying complex insurance terminology, answering queries, and providing expert advice tailored to your needs.

In the context of home-sharing, insurance agents deeply understand the variances between different types of coverage, the potential risks that come with home rentals, and any holes that might exist in your current insurance coverage. They can also dissect the insurance provided by AirBnB and Vrbo, enabling you to grasp what is encompassed in their policies and what is left out.

Key Takeaways