Have you ever used a home-sharing site? Airbnb may be the most popular one, but there are plenty of other examples, like VRBO (Vacation Rentals by Owner), HomeAway, Flipkey, and Homestay. With the price of hotels skyrocketing—especially in major cities—many people are looking for more cost-effective alternatives when vacationing. For the most part, it seems like a win-win situation. Tourists get a cheaper place to stay in popular locations; homeowners make some extra money to cover their mortgage or rent. However, this new sharing economy is creating some interesting situations from an insurance standpoint. Here’s what you need to know before you try it.
Once you list your home online…
It instantly changes from a residential to a rental property. Depending on your homeowner’s insurance policy, that means you may or may not be covered if someone “sharing” your house causes damage(s). It’s generally recommended that you contact your insurance agent before you decide to enter such an arrangement to ensure you have the proper coverage in place. After all, it’s much easier to fix the situation before a problem arises than it is to try to retroactively apply coverage.
Additionally, if your insurance company didn’t agree to cover commercial use of the policy and they find out you’ve been advertising it as such, it could void the entire contract. The risk doesn’t have to be directly caused by a negligent of destructive renter, either. It could just be storm damage, or a failed sump pump, but if you have to rely on the eyewitness account of a random renter to validate the claim, your insurance company is going to know something is up. That’s why providing all information upfront is best for the validity of your policy.
When you purchase extra protection through the site…
It’s not the same as home insurance. Even if you’re using a reputable site that offers extra protection free of charge, it can’t provide the same comprehensive coverage as an appropriate home policy. Usually these provisions only apply to specific situations, and their limitations will vary from site to site. If you want to use them, be sure you read the fine print and communicate with the hosting service to find out exactly what’s covered.
In this case, nothing in these online options provides for run-of-the-mill damages unrelated to their specific hosting. So, if you’re listing with multiple sites, you’ll have to be extra careful about what you have in place and with whom. Regardless of the site, nothing replaces your full homeowners’ policy, which you can jeopardize if you fail to disclose certain information about renting out your property—even for a short time. Talk with our friendly staff at Freedom Insurance before making any definite decisions regarding the home-sharing industry. We can help you protect your home, in all circumstances.