Home Sharing Insurance
Another societal trend that is causing a stir in the insurance industry is Airbnb. For those of you who don’t know, Airbnb is a service people can use to rent out their home for days or weeks at a time. You can find a stranger’s home to rent all over the country and pay a nightly fee. While this seems like a great idea for those who love to travel, and those who want to make some money on the side, there is actually a potential insurance coverage gap. Let’s take a look at this potential gap.
First, let’s point out the exposures for both the host, who rents out their home and the guest. The host’s exposures include damage to their home, theft/vandalism of property, and any injuries that occur on the premises. The guest’s exposures include any injuries or damage that are caused to neighboring homes. The guest also has personal property they have brought with them that could be lost or stolen. Is there coverage for any of these?
Currently, insurance and what they refer to as “home-sharing” has a pretty significant gray area. When it comes to insuring the actual dwelling and personal property in this situation the exclusions on a homeowners policy are pretty unclear. The gray area stems from when the renting of a home is considered “incidental.” Incidental renting is when an insured rents out their home for a week or less per year, oftentimes for a special event (the time period may vary between carriers). A typical homeowners policy will usually provide coverage if the renting is considered incidental.
What We Know for Sure
Homeowners insurance does make clear that there is not any liability coverage provided for a business run from the insured’s home (which would include rentals). This would exclude coverage from any damage caused to other’s property and any injuries that would occur on the premises. Also specifically stated in a homeowner’s policy, the personal property of a renter is not covered.
ISO (Insurance Services Office) who develops general policy language widely used by insurance companies, anticipate some changes coming in the near future regarding home sharing. However, until they introduce a coverage extension or a home sharing endorsement, most insurance carriers will be unable to guarantee full coverage in home sharing situations.
The moral of this story is to not assume you are covered unless you have verified with your agent. In a situation like this, many people may not know there is a risk that may not be fully covered under their current insurance. Seeing as there is no widely accepted exclusion or endorsement to provide coverage yet, it is best to have a discussion with your agent if you participate in home-sharing. CRG has access to several carriers who offer their own, unique home-sharing coverage. If your agent knows you have a home-sharing exposure, they will place your insurance with the proper carrier so there are no coverage gaps.