Insurance Tips for Renting Out Your Home
Home-sharing and home rentals are becoming an increasingly popular. They are not only a great alternative to hotels, but you can make some money by renting out your space. There are a number of ways to rent out your home, whether it’s directly, through a rental company, or home-sharing services like Airbnb. In any case, ensuring you have proper insurance coverage is key. If someone were to get injured on your property while staying there you can be on the hook for some serious damages. You could lose your home or a ton of money if you don’t have insurance. Here are some tips insurance tips for renting out your home!
Does my personal homeowners insurance policy cover rentals?
Perhaps but there are certain limitations. Standard homeowners insurance or renters is designed for personal risks, not commercial risks, but it depends on the frequency in which you are renting out.
Your insurer may extend coverage if you are having guests in your home for a one-time event. Think of instances where big events like the Olympics or the Super Bowl are being hosted in your town and you want to rent out a room or your entire house to bring in a little extra cash.
If you give your insurance company advanced notice you may be able to obtain suitable coverage under your regular homeowners insurance policy.
Do I need business insurance to rent out my home?
Most often, renting out your home frequently to guests is considered as business use by insurer’s. Therefore, you would need to obtain a business/commercial home insurance policy in addition to your own. The commercial insurance would need to be specifically either a hotel or bed and bed breakfast policy.
Some insurers can offer a commercial home-sharing liability policy that can be purchased on a month to month basis. However, there may be limitations so it’s important to do your research.
- If you do not obtain business insurance, you could end up covering a lot of money in damages. Items that would not be covered by your regular insurance policy include:
- If a guest has stolen or damaged personal property while staying in your home
- If a guest steals or damages your personal property
- Injury or property damage to anyone else caused by your guest
- If you live in an apartment or condo, if there is damage to the building by the guest
Even if you do have a business insurance policy, it is important to check for all of the exclusions and limitations. Some items may not be covered and you don’t want any surprises.
What about Umbrella Insurance?
Umbrella insurance is an additional coverage plan that applies when you exceed the liability portion of your home or auto insurance. It often is used to help protect you should you be involved in a lawsuit or a major insurance claim is filed against you. There are both personal and commercial umbrella policies available. A commercial home umbrella policy may provide adequate additional coverage.
Yes – these companies do offer insurance policies for their hosts but it is important to do your research. The policies tend to differ between different companies so finding the policy that works for you can help you decide in which service to use. In general, coverage from both of these companies include:
- $1 million per incidence in coverage
- Covers third-party claims of bodily injury or property damage
Always be sure to check the policy details to see if it works for you and determine if you need to purchase additional coverage.
What if I am staying in a rental? Do I need insurance?
If you already have a renters or homeowners insurance policy, you should be covered. Most policies will cover any stolen personal property or accidental injuries to someone else while you are staying in a short-term rental home.
What other things can I do to minimize any risks?
One of the best things you can do is to do a thorough check of someone before you give them access to your home. Ask for identification, reference checks, or a deposit before renting. It can help ease your mind as to who you will be renting out to.
You can also require that a guest have their own homeowners or renters insurance policy in order to stay in your home. Most of the common home sharing sites, like Airbnb, will give you access to their screening services. These services generally give you an overview of the guests background.
- Investigate all of your insurance options. These include your homeowners policy, umbrella policy, commercial policy, or utilizing the Airbnb or HomeAway policy.
- Look into who will be staying your home. This could reduce the risk of having someone stay there that can cause major damage.