How does operating Airbnb impact your home insurance?

Airbnb has brought vacationing to the next level. Now, instead of having to pay large hotel bills and restaurant bills while on vacation as well as rent and utilities on your apartment back home, you can rent out your place to cover your housing costs and save money by booking an Airbnb at your destination.

Unfortunately, the insurance world hasn’t quite gotten their policies up to date and that can cause problems for homeowners looking to rent out their home on Airbnb in Canada.

Home insurance doesn’t like Airbnb

The majority of hosts on Airbnb assume that home insurance will cover themselves and their Airbnb guests. If we look at the situation from a home insurer’s point of view, we can see how the companies might have a problem with Airbnb.

For a once-in-awhile situation, home insurance companies couldn’t care less that you rent out your home. However, people who routinely invite strangers into their homes and expect that their home insurance will cover potential damage and bodily injury are in for a shock. Even insurance policies touted as “Airbnb home insurance” don’t cover everything. This means you could be on the hook for thousands of dollars.

From the insurance company’s point of view, the problems caused by the unsupervised, unknown people in your home are now your responsibility, not theirs. You could see increased home insurance rates in some cases.

Options

Airbnb does offer protection to its hosts for up to $1 million in damage. This form of insurance is in addition to their Host Guarantee and is meant to be in addition to a regular home insurance policy.

Other insurance companies have recommended that heavy Airbnb users in Canada and other countries purchase business insurance instead of home insurance. Business policies can be slightly more expensive than home insurance, but these policies cover businesses (the Airbnb rental in this case) from damages or physical injury suffered by any stranger who comes onto the property. In this way, business insurance policies are much more comprehensive than home insurance policies.

Airbnb home insurance is still far behind what it needs to be to adequately cover all parties; that’s why Airbnb itself has had to offer supplemental insurance. Certain insurance companies, though, ever eager for more clients, do offer the opportunity to purchase business policies on a month-to-month basis – the perfect solution for hosts who only rent out their home occasionally and can’t afford a more expensive policy full-time.

What can you do

Read your home insurance policy before signing up for Airbnb in Canada, and make sure that it covers short-term rentals. If your policy doesn’t cover short-term rentals, call your insurance company to ask how much it would cost to increase your coverage. Smart shoppers will take it one step further and contact a home insurance broker for comparison quotes.

If you can’t find an affordable policy that covers short-term rentals, look into Airbnb insurance or business policies. Home insurance is not something that you want to gamble with. Since homes are the largest purchases we make in our lives, the possibility of not having insurance is foolish. A quick Internet search can return hundreds of stories of people who have rented their homes on Airbnb only to have the situation turn to disaster. Don’t be one of them.