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Do you rent out your property for short-term stays? These days, there are dozens of rental services vying for their share of the market. Each has its own rules and regulations for participating members. This adds to the confusion of what you should and shouldn’t do as a homeowner.
One glaring issue that keeps cropping up is that property owners assume that their homeowners’ insurance will protect them should something go awry. While there are some instances where it will safeguard them, there are also gaps that leave them exposed to liability. This is the exact reason why you need short-term rental insurance.
Wondering what short-term rental insurance is for furnished homes? Read on as we dive into the crucial details.
Before we can cover short-term rental insurance for renters, it’s important to first understand why it arose in the first place. Thanks to changes in society and technology, the nature of travel itself have evolved. If you were visiting a new city a decade ago, you might have thought to stay at a friend’s place or seek out a hotel for accommodation. These days, however, home-sharing services such as Zeus Living have changed the equation, making it easier and more affordable than ever to find a temporary place to reside in.
At its essence, home-sharing is a mutually beneficial arrangement that works as follows: Travelers seek flexible short-term rental arrangements that fit their travel schedules. In exchange, property owners rent out their property—whether for a day or several weeks—to earn extra income. As such, very few homeowners’ insurance policies will cover you should you use your primary residence as a vacation rental. According to the Zebra:
Most homeowners insurance policies offer protection for the occasional rental, as long as you inform the company beforehand. If you rent out your property on a regular basis, a standard homeowner’s policy isn’t likely to provide adequate coverage. Home insurance policies often exclude liability coverage — including bodily injury and property damage — for any business activity run from the home. If you are relying solely on your homeowner policy for protection, you may be at risk of being underinsured.
But why don’t insurance companies approve of this business activity? In a word, it comes down to risk. Opening up your home to strangers exposes you to a host of liabilities, including:
The increased risk combined with the fact that hosting guests for money is considered a business activity (which insurance companies homeowners policies don’t cover) has caused insurance companies to require that property owners attain further insurance coverage—namely, short-term rental insurance.
In an oversimplification, short-term rental insurance is third-party insurance offered to protect your personal belongings and property (as well as to cover you from liability to guests). It allows you to hand over the keys to your home with peace of mind that it will be safe no matter what.
It’s worth noting that most homeowners policies will allow for “occasional” short-term rentals. Say, for example, your city was hosting the World Cup and you wanted to get out of town in order to avoid the crowd and make extra money by renting out the house. The vast majority of policies are fine with this; however, it’s crucial that you read the fine print since every company’s “occasional” definition may differ.
Even then, many require that you notify them prior to engaging in the short-term rental.
As such, if you plan on regularly renting out a room or the entire house, you’ll want to check with your current insurer to see if they’ll allow you to add short-term rental insurance as a rider policy. Depending on your company, you may only have to pay for the nights guests stay at the property.
Typically, the coverage will include:
Now, the home-sharing company you work with may offer varying levels of automatic protection. With that being said, that doesn’t always mean that they have you covered from liability during short-term rental periods.
In most cases, if you rent your property for more than 90 days a year, your insurance company will consider you a business. This would mean that you were no longer protected by the policy you signed up for. That said, the number of days rented required to change policies depends on the city/state in question.
Regardless of your location, without short-term rental insurance, your cash cow could turn into a costly nightmare. And it’s not a matter of if, but rather, when.
While shopping around for your short-term vacation rental insurance there are a few things you must first consider:
Now that you have considered these, there are four primary types of coverage to choose between:
Prices vary greatly depending on the type of insurance for short-term rental. The first thing you must do is decide if you fall into the business category. If you don’t, yet you wish to rent on more of an Ad Hoc basis, then many organizations allow a pay-as-you-go option. This would let you insure your property daily for as little as $7.00. However, if you require commercial insurance, be aware that the cost of this can often amount to 3x as much as your typical homeowners policy.
Home-sharing can be a lucrative and exciting opportunity, one that’s made all the more so when you know that you’re protected from liability with insurance for short-term rentals.
At Zeus Living, we have three levels of insurance on every home, including homeowners insurance, a $3,000,000 commercial liability plan, and a requirement that individual resident renters obtain renters insurance. That way, everything’s covered in your home, from cleaning to liability. Just as insurance is supposed to put your mind at ease for your valuables, so does Zeus for your home and property.
If you’re considering renting out your property with us, know that you’ll benefit from all the below:
To spare you the hassle and headache, Zeus makes the process for homeowners seamless. This way, you know your personal property is safe, covered, and in good hands.
The Zebra, Airbnb Insurance
Bankrate. How Does Short-term Rental Insurance Work? https://www.bankrate.com/insurance/homeowners-insurance/short-term-rental-insurance/
Benzinga, Short term rental insurance
The San Francisco Chronicle, Airbnb hosts face conundrum when it comes to renting