Most of us don’t care whether homeowners’ insurance covers claims caused by renters. After all, how many people actually rent their homes to strangers? As it turns out, a lot of people do. Home-sharing services have turned a growing number of ordinary homeowners into part-time innkeepers.
According to the Pew Research Center, 11% of American adults have used online home-sharing services like Airbnb or VRBO. Airbnb boasts of having over 3 million listings worldwide. This means that a lot of people really need to care about whether homeowners’ insurance covers claims caused by renters.
Home-sharing is not without risk. For example, host homeowners face an increased exposure to:
- Personal and structural property damage or loss.
- Criminal activity, theft and vandalism.
- Liability to guests for property damage or bodily injury that occurs on the premises.
- Liability to third-parties for property damage or bodily injury caused by guests.
Standard Homeowners’ Insurance
Standard homeowners’ insurance policies don’t directly address home-sharing because it didn’t exist when these policies were created. Nevertheless, there are a number of long-standing provisions in standard policies that could limit or exclude coverage for the host homeowner.
- Eligibility. Many policies are restricted to dwellings used exclusively for private residential purposes.
- Property Coverage: Standard policies generally do not cover the theft of a host’s personal property from areas that are rented to guests. The same is true for a guest’s personal property. They can also limit coverage for appliances, carpeting and household furnishings in areas that are rented to others.
- Liability Coverage: Standard policies don’t provide liability coverage for business conducted from the home, like renting your home guests.
As you can see, standard policies may not cover a host homeowner’s losses even though home-sharing is not expressly mentioned or excluded. These coverage gaps are common when standard (old) policies are used to insure non-standard (new) activities.
Unfortunately, the insurance industry doesn’t move as fast as the Airbnb’s and Über’s of the world. So, before joining the sharing economy, review your standard insurance policies carefully to identify any potential coverage gaps. If you’re not sure, ask an experienced insurance agent.
Please contact us to learn more about home-sharing host insurance coverage.
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