Many homeowners believe that their homeowner’s insurance policy will protect them when renting out their home or a portion of their home using a home sharing service like Airbnb or Vrbo.
Unfortunately, this is often not the case. Insurance companies only cover damage that occurs when the homeowner lives there full-time, which means theft and property damage caused by guests may not be covered. Thankfully, you can invest in a home sharing insurance policy to cover you when you rent out your home.
What is Home Sharing Insurance?
To understand home sharing insurance, you first need to understand what home sharing is. Home sharing refers to a situation when you share your entire home or a portion of your home in exchange for some sort of payment. This is usually done through a home-sharing network, such as Airbnb or Vrbo. These home-sharing networks are a common alternative to hotels and are very popular for travelers in every city and some of the most popular vacation destinations.
Homeowners insurance policies offer coverage for when you are living in your home full time. A homeowner’s insurance policy does not cover home sharing because once you start home sharing, your home technically becomes a rental property. Rental properties require different insurance policies, even if you’re only renting out your home temporarily. Renter’s insurance also won’t cover your home under these situations. Home sharing insurance, however, does cover these short-term renting scenarios.
A home sharing insurance policy is a policy in which the insurer knows you’re renting your property out to people in exchange for compensation. If you have a regular homeowner’s insurance policy, you’ll be familiar with many of the coverages that are included with a basic home sharing insurance package.
If you don’t have home sharing insurance and a guest damages your property, your homeowner’s insurance company might refuse to pay out for a valid claim because the company didn’t know that you would be renting out your property (even temporarily) when you signed onto your policy.
Advantages of Home Sharing Insurance
Home sharing insurance is advantageous because it protects your property in the event that a guest or visitor damages your property. Many homeowners incorrectly assume that their homeowner’s insurance will cover any damage to their home caused by guests. However, the act of renting out your property, even if it’s only for a single night, will usually result in a denied claim from your homeowner’s insurance provider.
Additionally, you shouldn’t depend on your home sharing network to protect you in the event that you suffer from a theft, lawsuit or damage to your property. These networks retain very limited liability for the conduct of their guests and will only assist you in very specific circumstances. Holding a home sharing insurance policy gives you the peace-of-mind that comes with knowing that you won’t need to depend on Airbnb to fight its own customers on your behalf should a guest cause damage to your home.
What Does Airbnb or VRBO Cover Then?
Home sharing networks do offer some sort of insurance, usually at no extra cost for the host. However, these policies will only cover you in very specific circumstances. For example, Airbnb offers Host Protection Insurance at no extra cost to all of its hosts using the platform. This insurance may cover any bodily injury to guests, damage to the property of the guests and damage caused by guests to common areas such as a building lobby or a neighbor’s property. However, this coverage only applies if a guest sues you for damage or bodily injury — it won’t provide you with any type of protection or compensation to any damage caused to your own property by the guest.
Airbnb does also offer a Host Guarantee program, which is its version of property damage protection for the host. This program provides up to $1 million in compensation if a guest damages your property while staying with you or steals from you. The catch is that you must first attempt to recoup expenses from the guest themselves before the coverage will help you pay — and if Airbnb doesn’t think that you tried hard enough to get compensation on your own, they may refuse to compensate you for damage.
Vrbo operates in a similar manner. Though the company offers up to $1 million in liability coverage for its hosts at no additional charge, this compensation will not provide any type of coverage for you in the event that a guest damages your property — it will only help pay for legal expenses and awarded judgements if someone decides to sue you.
What Should Your Home Sharing Insurance Cover?
There are a number of problems that you can run into as a homeowner who is renting out their property. With some homeowner’s insurance policies, you can add coverage for certain home sharing activities. Other insurance providers exclude home sharing altogether. Regardless, you will want to choose a home sharing insurance policy that at least covers the following areas.
- Damage: This protection provides you with compensation in the event that a guest damages or destroys a piece of your property. Covered damages that the guests can cause to your home could be small (like a broken brick on a pathway) or large (like a fire from leaving the stovetop on).
In the case of damage, you must be diligent in documenting and reporting when and how your things were damaged. You must have original photos from before the damage occurred, any receipts and all other documentation that is required in order to prove that the damage was caused by a guest and not already damaged before the guest arrived at your property.
- Liability: While guests are in your home, you are technically liable for anything that occurs. The home sharing network may offer some sort of liability insurance, but home sharing insurance offers this protection as well. The network’s coverage will only offer compensation up to a certain amount, generally up to $1 million. However, a personal injury lawsuit could easily surpass this amount. While you may do everything you can to make your home as safe as possible for guests, anything could happen and you could be sued for potentially hundreds of thousands of dollars if a guest accidentally injures themselves in your home.
- Criminal activity: Guests can easily partake in illegal activity while renting your home, and this could end up becoming your problem if a death or another incident occurs relating to this activity. However, the most common criminal activity that home sharing insurance comes in handy for is theft.
If a guest steals your personal belongings while visiting your property, your home sharing insurance should cover the cost of a replacement. However, you’ll need to provide photos that are timestamped to show that the item was in the house while the guests were there and now is no longer there after the guests checked out. Fraud (even when committed accidentally) is not taken lightly by insurance companies, so be sure to document everything before and after a guest visits your property.
Benzinga’s Best Home Sharing Insurance Carriers
If you’ve been using a home sharing network without home sharing insurance, you could be putting yourself at a major financial risk. Protect yourself with coverage — we recommend starting your search with a few of our favorite providers below.
Share Your Home Safely
The bottom line? If you’re using a home sharing network and you’re relying on your homeowner’s insurance policy to cover you in the event of damage or theft to your property, you’re making a huge mistake.
We urge you to invest in home sharing insurance before you rent out your property again to avoid a massive liability or home repair bill should something go wrong.
Frequently Asked Questions
Do you need extra insurance for Airbnb?
Yes. Though Airbnb provides you with some protection for instances of liability, this coverage will only come into play if a guest decides to sue you. It will not cover damage to your personal property. Even Airbnb’s Host Guarantee program requires that you first attempt to receive compensation from a former guest before they’ll help you cover damage.
How much does home-sharing insurance cost?
The answer to this question will vary depending on a range of factors, including your home’s size, its value, where you live, the amount of coverage you need and more. We recommend getting a quote from at least 3 competing insurance providers before you make your final decision to ensure that you’re getting the most competitive rate possible.
Get Protection Now
Lemonade offers fast, easy coverage through their seamless application and claims process. Get personal property and liability protection with Lemonade Renters Insurance.