For the most part, using your home as an Airbnb can be a lucrative way to make extra cash or to subsidize the mortgage on your property. The post pandemic travel boom has driven new heights of wanderlust, but the savvy traveler is still wary of close contact, so Airbnb rentals have become more reclusive havens of choice. The New York Times reports, “Home rentals have outperformed hotels in 27 global markets since the onset of Covid-19, according to a report by the hotel benchmarking firm STR and the short-term rental analysts AirDNA.”
But before you register your home on the Airbnb site, it would be wise to spend some time researching the insurance coverages available and whether you have addressed gaps. Yes, most Airbnb transactions go well, but you don’t have to spend much time searching to find stories of Airbnb tenants who held parties that left property damaged or items stolen. Such moments may be few and far between, but you do need to be aware of and covered for the potential of damage, theft, renter injury, and more.
The first thing you should know is that Homeowners Insurance often isn’t enough. Some policies allow for occasional rentals (every few months or longer), but coverages can be quite limited. If you are considering more frequent rentals, you will almost certainly need additional coverage, as insurers will consider your venture a business–requiring different types of insurance. To start the process, you will need to speak with your insurer about your plans. According to insurance expert Laura Adams, “Using your property for business purposes is something your insurer needs to know about, so never hide it from them.”
Some insurers will offer endorsements that act as riders on existing homeowners policies, particularly in situations where you are renting a portion of your property while you reside in another part. Where endorsements are not available or when you are renting the entire property, you may need a Landlords Policy. A Landlords Policy typically covers “the primary dwelling, other structures on the property, personal property inside the dwelling, lost rental income, and any liability claims filed against you.”
Standard homeowners’ policies may not fill in the gaps, as they may be considered “not in effect” while renters are on the property. In other words, storm damage incurred while renters are on the premises may not be covered by homeowners. Ultimately, then, it is your responsibility to ask the questions of your insurer so that you know how to cover gaps and can pick the products that are best for your situation.
If you are looking to rent out your property as an Airbnb, give A and H Insurance a call. Many insurance companies do not offer coverage for Airbnbs or short term rentals. As an independent insurance broker, we represent several insurance companies that may offer policies or additional endorsements to your standard homeowners policy such as Travelers, Foremost, Safeco, and Progressive. Each insurance company has different coverage options and pricing, so check with A and H to see what plan will work best for your situation.
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Ivan Young is a writer in partnership with vacation rental accounting service, Ximplifi.
