How Property Insurance Can Protect Your Home If Used as an Airbnb

The popularity of short-term rentals, Airbnb, VRBO, and others continue to climb in usage and availability. The rapid growth of the service, with nearly 700,000 units available in the U.S., is a cause for alarm to local and state governments, HOAs, and homeowners who resist seeing their neighborhoods transform into short-term rental districts. Such business use of one’s primary or secondary residence raises questions about Rental Property Insurance.

Airbnb Phenomenon

There are numerous angles to consider for all involved or affected by the Airbnb phenomenon we are witnessing today. For many homeowners and condominium owners, the movement is a contentious problem we covered in previous posts. 

Here is an excerpt from our Considerations for Condo Associations & Short-Term Rentals post:

Short-term rentals often irritate association boards because temporary tenants do not behave the same as full-time residents. The problems they cause are why associations oppose short-term rentals. Board members know a rise in short-term condo rentals is likely to force residents to experience noise, extra traffic, late-night comings, goings, belligerent behavior, vandalism, littering, and other troubling matters. 

Short-Term Rentals Present Opportunity and Risk.

Sharing your home is a potentially profitable business opportunity, but your homeowners insurance might not cover losses related to home-sharing activities. Therefore, before you open your house to temporary guests, it’s vital to protect your property and yourself from damage and personal liability claims with the correct insurance coverage.

If you decide to put your home into the short-term rental pool, you need proper insurance protection for your home, visitors, property, and personal assets. 

Protect Yourself from Liability Claims.

Renters insurance only covers the tenant, not the landlord. Landlords should purchase additional coverage to protect themselves against liability claims.

Homeowners who rent out their homes through an online platform like Airbnb should consider purchasing a separate policy specifically designed to cover the risks of sharing their property. In addition to protecting your home and personal assets, you’ll also want adequate coverage for the type of risk involved.

Never Take Insurance Protection Coverage for Granted.

Most insurers won’t insure homeowners who use their property for commercial purposes unless they obtain special permission from the insurer. Check with your local independent rental insurance expert or your insurance provider to see what types of coverage are necessary and available.

Get the Right Coverage.

You can’t afford to be underinsured when disaster strikes. You can find the correct coverage by consulting with your insurance agent. These are essential questions to ask your agent:

• What types of risks does this policy cover?
• How much coverage do you need?
• Are there any exclusions that apply?
• How to file a claim?

Does Homeowner or Landlord Insurance Include Short-Term Rentals?

Knowing whether your insurance covers your rental property business is essential if you rent out your home or apartment through Airbnb, VRBO, or another short-term rental site. Some policies cover only long-term rentals, so if you plan to rent out your place for less than six months, you must check what your policy says before renting out.

Homeowner vs. Renter Insurance

There are two main types of insurance: renters insurance and homeowners insurance. Both protect against damage caused by fire, theft, vandalism, weather events, and more. However, renters typically have fewer protections than owners because renters usually don’t own the building where they live.

Some companies may refuse to insure properties used for short-term rentals. Proper coverage can help protect renters against losses due to fires and earthquakes.

What Does My Homeowners Policy Cover?

Your policy with applicable endorsements should cover your home against damage from natural disasters like hurricanes, tornadoes, earthquakes, and wildfires. It probably insures losses from break-ins, vandalism, and accidental water damage. You can learn what is covered by reading your policy.

You should consider purchasing additional coverage for specific risks, such as flood, earthquake, and windstorm damage. It’s highly advisable to buy special coverage for items valuable to you in your house or apartment, such as jewelry, electronics, art, antiques, and collectibles.

Insurance Companies Offer Different Types of Coverage.

Some insurers offer different levels of coverage based on how much risk you assume. For instance, you might pay more for an “all-risks” policy that protects you from potential losses. Or you could choose a “named perils” policy that limits your coverage to just those risks listed on the policy. In addition, some insurers provide discounts if you buy multiple policies with them.

How Do I Know What Form of Insurance To Buy?

There are many factors to consider when choosing which type of insurance to buy. The following sections explain how each option works.

Renters Insurance.

This kind of insurance covers renters for damages caused by fire, theft, vandalism, and other hazards.

Landlord Insurance.

Landlord insurance covers the property from the main peril listed in a homeowners policy. Additionally, it covers your building, including its structure & foundation. It also covers any alterations to the property, including fences, decks, sheds, garages, and more. Unlike a homeowners policy, it covers rental income protection. It does not include the tenant’s contents property.

Homeowners Insurance.

This coverage protects your property and belongings. It typically covers damage from fire, lightning, windstorms, theft and other events. Also, it includes liability protection that helps protect you if someone gets hurt on your property. The liability portion of homeowner’s insurance pays for legal expenses if you cause injury or damage to another person.

Specialty Coverages.

These coverages provide additional benefits, and as such, they might help you recover costs related to specific types of losses, such as flooding and mold.

Flood Insurance.

Flood insurance helps homeowners rebuild their homes after a flood. You can qualify for federal assistance if you live in an area designated as a flood zone.

Mold Damage Insurance.

Mold damage insurance pays for repairs to affected areas of your home. This coverage may be available through your homeowner insurer so you should check with your agent on it availability.

Ten Tips for Working with Your Local Independent Agent.

Keep these tips in mind when talking to your insurance agent:

1. Make sure your policy has sufficient limits.
2. Book an annual review of your policy every year to ensure it continues to provide all the coverage you need.
3. Contact your agent immediately after a loss occurs.
4. Keep a copy of all receipts and other documentation related to your claims.
5. Be aware of limitations on how long you can wait before filing a claim.
6. Talk to your agent about deductibles and coinsurance requirements.
7. Ask your agent whether you need to provide and what is necessary when submitting proof of loss forms to your insurer.
8. Know your rights under your policy by carefully reading it and asking questions if something doesn’t seem clear.
9. Maintain your policy in a safe place so you can know your coverage exactly and what to do when filing a claim. Keep track of your policy number and contact information. 
10. Lean into the knowledge and competency your local agent offers because they offer experience and valuable suggestions on how to prevent claims from happening. 

Get Local, Expert Advice on Protecting Against Short-Term Rental Risks.

In conclusion, there are several ways to protect your home while renting it out as an Airbnb. However, make sure you choose the right insurance plan for your situation.

The first thing you need to do is find a reputable insurance company with good customer service. Next, you must read your policy and decide how much liability coverage you want to carry. Doing these things may help you avoid problems when turning your home into an Airbnb. 

You may own a single-family home, a condo, or perhaps rent a secondary vacation home. Likewise, you can rely on the decades of experience Dickstein Agency Associates offers its Rental Property Insurance clients.

About Dickstein Associates Agency

Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area since 1965. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As Trusted Choice™ independent insurance agency, we partner with various national and regional carriers, allowing for flexible coverage for each client’s unique circumstances. For more information on how you can leverage all your insurance to work best for you, and how we can secure the best insurance in the marketplace suited to your specific needs and business objectives, contact us today at (800) 862-6662 or www.dicksteininsurance.com.