More and more of my customers and friends are asking this question. Many of them are opening their homes for rent online. It’s called “peer to peer home sharing” and it’s gaining in popularity. It seems like everyone’s doing it.
In this installment of “Insurance Matters,” I’ll discuss ways that you can reduce your risks if you decide to get in on this new home-sharing opportunity.
What is “Peer-to-Peer Home Sharing?”
Just like Uber lets you become a taxi service, Airbnb and other peer-to-peer home sharing websites make it possible for you to easily become a bed and breakfast, or a hotel- all without the overhead.
Airbnb does the advertising and helps with screening potential customers. They even help with pricing. You supply great pictures and some amenities that set you apart, and soon you will have paying guests staying in your home. Thousands of people have found this a safe and easy way to make extra money and meet new people as well.
Many cities like Los Angeles and San Francisco are writing new zoning ordinances that govern home-sharing, and they are enforcing existing zoning ordinances more strictly. More cities are following.
Here in Napa, there are zoning ordinances that can apply to renting out your home on a regular basis. You may need a special permit to regularly rent out your home.
RISK REDUCTION: Check with the city before listing your home on a peer-to-peer home sharing site.
INSURANCE CONCERN #1: SPECIFIC EXCLUSIONS
Some homeowners policies specifically exclude peer to peer home sharing. Or they limit the amount of money you can earn from home-sharing, after which you are no longer covered.
RISK REDUCTION: Read your policy exclusions. All of them.
INSURANCE CONCERN #2: “BUSINESS” DEFINITION EXCLUSION
Standard homeowners policies exclude coverage when your home is used as a business. The standard HO3 policy (a template that insurers often use) specifically defines this exclusion, and that definition can easily be applied to regular use of your home for Airbnb.
RISK REDUCTION: Read the “Definitions” section of your policy, including the “Business” definition. Ask yourself, honestly, if you are doing this as a business. The insurance company will most certainly ask that question after you make a claim.
INSURANCE CONCERN #3: AIRBNB’S FREE POLICY
Airbnb offers a free policy to those who rent their homes out using their service. That sounds great. At least until you realize that it only pays after your own homeowners policy pays. That could leave you exposed to a lawsuit while insurance companies fight.
RISK REDUCTION: Download and read the Airbnb policy. Look for responsibilities and exclusions.
Of all the things that can put you in a dangerous insurance position, peer-to-peer home sharing is near the top of my list. Make sure that you call your insurance agent BEFORE listing your home on Airbnb.
THE GOOD NEWS
There are policies available at an affordable price that can properly cover you for the risks associated with renting out your home. Your local agent should be able to help.
Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates helping clients with insurance needs for personal, commercial and business insurance. Bruce can be reached at 707-931-0186, firstname.lastname@example.org