Is Traditional Homeowners Insurance Enough for Airbnb Rentals?

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Real Estate

Gone are the days when travelers preferred to stay in hotels. Nowadays, people opt for more personal stays in Airbnb homes. In fact, since 2008, over 200 million people have used the service, with 80 million using it in 2016 alone. Millennials, in particular, are in favor of renting out extra space to visitors, with 85% supporting the idea.

But how does one protect themselves when renting out their property for extra income? Is a traditional homeowners insurance policy enough?

What is Home Sharing?

Home sharing is renting out your property via websites or apps such as Airbnb or HomeAway. Potential guests can find your home, reserve and pay for it like a hotel. However, unlike hotels or bed and breakfasts, home sharing properties aren’t licensed or regulated.

Unfortunately, this puts you at risk of paying for damages caused by renters or medical bills in case of injury. Therefore, it’s necessary to protect yourself.

Protecting Yourself

If you’re home-sharing, talk to your insurance agent to purchase a landlord policy that covers the structure, property inside, lost rental income, legal fees, and liability claims. Your standard homeowners insurance policy may not cover short-term rentals, and even if it does, your claim may still be denied. Homeowners and renters insurance policies aren’t meant to cover commercial use.

Insurance costs may vary based on your property’s size, location, features, and the type of coverage you want. Renting only to people with their own insurance policies may cut down your pool of renters. However, Airbnb offers its own Host Protection Insurance program.

Seniors aged 60 and older make up Airbnb’s fastest-growing demographic worldwide, with more than 200,000 hosts. Surprisingly, seniors are the best-reviewed hosts, receiving more 5-star reviews than any other demographic.

FAQ

1. What is Airbnb?

Airbnb is a platform that allows people to rent out their homes or apartments to travelers for short-term stays.

2. What is homeowners insurance?

Homeowners insurance is a policy that provides financial protection for a homeowner’s property and possessions in the event of damage or loss.

3. Does traditional homeowners insurance cover Airbnb rentals?

No, traditional homeowners insurance typically does not cover damages or losses that occur during an Airbnb rental. This is because Airbnb rentals are considered commercial activity.

4. What kind of insurance do I need for my Airbnb rental?

For an Airbnb rental, you will need a specialized insurance policy designed for short-term rental properties. This policy should cover both property damage and liability.

5. Can I add an endorsement to my existing homeowners insurance policy to cover my Airbnb rental?

Some insurance companies offer endorsements or riders that can be added to your homeowners insurance policy to cover short-term rentals. However, not all companies offer this option, so it’s important to check with your insurance provider.

6. What does an Airbnb insurance policy typically cover?

An Airbnb insurance policy typically covers property damage caused by guests, liability for injuries or accidents that occur during a guest’s stay, and damage caused by theft or vandalism.

7. How much does Airbnb insurance typically cost?

The cost of an Airbnb insurance policy can vary depending on factors such as the location of the rental property, the length of the rental period, and the coverage limits. On average, the cost can range from $5 to $15 per night.

8. Do I need to purchase Airbnb insurance if I only rent out my property occasionally?

Yes, even if you only rent out your property occasionally, it’s important to have insurance coverage specifically designed for short-term rentals. Without this coverage, you could be held liable for damages or injuries that occur during a guest’s stay.

9. What happens if a guest damages my property during an Airbnb rental?

If a guest damages your property during an Airbnb rental, you should contact your insurance provider immediately to file a claim. Depending on the circumstances, you may also be able to seek compensation from the guest.

10. How can I find the best insurance coverage for my Airbnb rental?

To find the best insurance coverage for your Airbnb rental, it’s important to compare policies from multiple providers. Look for policies that offer comprehensive coverage at a reasonable price, and make sure to read the fine print to understand exactly what is covered.

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