Online Home Sharing – Are You Covered?

If you’re planning to rent a home to guests via an online home-sharing website, or if you’re using one to find a summer vacation rental yourself, it’s important to have the right insurance protection. The National Association of Insurance Commissioners (NAIC) has answers to the most frequently asked home-sharing insurance questions.

What are home sharing websites?

Home-sharing or peer-to-peer rentals (P2P) are sites like Airbnb, Roomorama and HomeAway that connect hosts with guests. Guests find a property and pay for the stay like a hotel. The difference is that the property is not a licensed hotel or bed and breakfast and is often a privately-owned apartment, condo or house. Anyone can register as a host or guest.

What’s the risk?

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What if your guest vandalizes your property, the hallway of your condo or even your neighbor’s swing set? What if your guest gets injured on your property? As a host, your homeowners or renter’s insurance policies are not designed to cover accidents arising from property rental and your insurance company may deny coverage for any resulting claims.

While operating as an online platform, these types of rentals may fall outside of local zoning or housing laws and regulations, which could result in violating local law or code. Even if you have not violated any law, you might have to hire legal counsel to protect and defend yourself.

Does my homeowners liability cover paying guests?

Accidents can happen, anytime, anywhere. Even if you take preventative measures, someone could trip over a rug or fall over their feet, causing injury. Most homeowners policies provide coverage if a home visitor falls and is injured. However, that is likely not the case if a paying guest falls in your home, because coverage may not be intended for commercial use. And without liability insurance protection from the company facilitating the host agreement, your homeowners or renter’s insurance policy might leave you with no coverage. Homeowners policies typically exclude or provide very limited coverage for homeowners who are running a business in their home. If you lease out a room or your entire home for profit, your insurer could claim you’re essentially running a hotel or bed and breakfast and deny coverage.

How can I protect myself as a guest?

Your own homeowners, renter’s or personal liability insurance policy will generally protect you even as a guest if you happen to cause damage to a host’s property. But understand that per Airbnb’s user agreement, the company reserves the right to make a claim under your homeowners or renter’s policy for any damage or loss you cause to an accommodation. Other P2P companies may have similar agreements so make sure to check their terms of use.

What else do I need to know?

Currently, Airbnb provides host protection insurance with coverage up to $1 million if a third-party claims bodily injury or property damage against you as a host. This liability insurance program is automatically applied to every listing in the U.S. and the coverage is secondary. It only applies after your primary insurance policy either settles or denies a claim. Laws regarding P2P companies vary from state to state, even city to city so it’s important to speak with someone who is knowledgeable about your location. Talk with your agent about your risks as a host to make sure you are properly covered before you list your property for rent.