A lot of clients have asked me about Airbnb, which has become very popular these days. It’s important to consider the insurance implications of vacation rental services like Airbnb, so I’ve brought in an expert.
Today I wanted to talk about the pros and cons of Airbnb. I’m joined by Bart DeLio of Farmer’s Insurance for this topic.
For example, I’ve had many people asking me about buying condos and if they can rent them out on Airbnb. Many condos actually prohibit it. Insurance-wise, there are some things you need to watch out for.
As Bart says, your home is probably the biggest thing you’ll ever own. As soon as you put your house up as a vacation rental, you’re turning it into a business. You need to look at it as a business in terms of taxes and reporting the income you’ll get from it. You also need to modify your insurance accordingly.
Your regular homeowner's insurance policy does not cover business pursuits. There are policies that will cover you for this, but they have certain limitations. It’s difficult to get coverage for single units, like a single rented room, for example.
Airbnb has something called Host Protection Insurance, which is a program that Bart likes because it fills in some of the loopholes we see in policies for condos or other rented units. It doesn’t eliminate all condo issues, though.
Consider all the risks before renting your home to a stranger.
The Airbnb policy covers things like bodily injury and property damage to a third party. The biggest thing that it doesn’t cover is loss of use. If you have a fire at your house, for example, and you can’t use the house for six months, your regular insurance policy will pay for you to stay somewhere else for six months. Airbnb does not cover that loss of use.
Just like any business, there are risks involved that you need to consider carefully before you rent your home to someone you don’t know.
If you have any insurance questions, you can reach out to Bart at 562-433-0300 or [email protected], or you can visit his website.
As always, if you have any questions for me, give me a call or send me an email. We would be happy to help you!
