These days, travelers and vacationers around the world are using hotels and motels less and less. What’s being used instead? Home rental sites like Airbnb, HomeAway, FlipKey, and VRBO (Vacation Rentals by Owner).
These sites allow travelers to stay in large, luxurious, all-inclusive homes or they provide a small, comfortable bedroom for cheap, short-term stays. Prices, home sizes and styles, and locations run the gamut. And everything is contingent on homeowners — or those who own second or third properties — renting out their dwellings.
For homeowners Minnesota, the idea can sound quite appealing. You already own a home or second property, so why not make some extra cash from it, right?
Certainly, the idea has a lot of potential, but if you’re wise, you’ll take a second look at the possible risks involved — namely, where insurance is concerned.
Insurance and Home Rentals
As a homeowner, you know that you need insurance to protect you and your family from accidents and other unexpected events. A comprehensive homeowners insurance policy protects you from accidental damage caused by you, damage caused by inclement weather or other natural events, liability claims against you, and often defamation of character and more.
But what’s important to remember here is that if you rent out your home to vacationers and travelers, all of these coverage points disappear. In plain English, your homeowners insurance policy will almost certainly not be effective if an accident occurs while you’re renting out your home.
This is because renting your home to strangers is a risky business. Your insurance company provided you with your current home insurance plan because you and/or your family fit their criteria, and they found you trustworthy and insurable. This is not the case for strangers who may end up renting your home. Therefore, you’ll need additional insurance to cover these people’s stays in your home.
Finding the Right Supplemental Insurance
Okay, you know you need more insurance, but where can you get it, and what kind do you need?
At this point, many homeowners looking to rent out their homes will go to the hosting platform site they are considering using. Sites like Airbnb do have insurance that they provide to hosts, and they often advertise it as if it’s comprehensive and all-inclusive, without any coverage gaps.
This is actually false. Airbnb insurance does offer some sort of coverage. For the most part, it will protect you against liability claims. For example, let’s say that you rent your home to a family of four. One of the children accidentally falls outside in the yard and scrapes their knee on a rusty bench, which later requires a trip to the hospital and a tetanus shot. This family may have substantial medical bills that they could make a claim against you. Fortunately, your Airbnb insurance would cover you.
What Airbnb insurance will not protect you against is damage to your building structure and property. For example, let’s say that you rent out your home to a man and wife. You don’t know them, but they pay and arrive, and everything’s fine until you go to your home after their visit has ended and find that things are in major disarray. Your stereo system and television are gone, your kitchen is a mess with broken dishes everywhere, and there’s a huge hole in your ceiling from who knows what.
At this point, if you turn to your Airbnb insurance for help, you’ll almost certainly get nothing. It’s likely the hosting platform would ban these renters from renting on their site again, but you’re not going to get monetary compensation for the damage that was done.
Getting Help With Your Insurance Agency
Knowing what you know from this article, you may decide that renting on a site like Airbnb is not for you. But if you would like to move forward, you do have options for purchasing additional insurance plans through your home insurance agency. These plans will likely be landlords insurance, rental dwelling insurance, and/or business insurance.
What you need to do is speak to your Insurance provider to learn more. Agents at Patriot Insurance would be happy to speak with you any time. Call us today to learn more.