People converting their houses and apartments into Airbnb rental units (technically known as “short-term rentals”) has become common all over the world, thanks in part to listing giants and industry disruptors like Airbnb. Just take a look at their website or newsletter subscriptions, and you'll see friendly and enticing homes you could stay in, from Alaska to Zimbabwe and plenty of places in between.
The legality of renting your house or apartment, however, is a different story, and is currently gridlocked in many cities and towns across the world. Here in Beacon, the City Council has been pondering the issue in recent meetings and workshops. In fact, a public hearing about it is scheduled for Monday, April 2, 2018 so that the council can hear from the public as members consider different levels of legislation.
While it’s fun to spruce your house up and make money while you’re not there, what are the insurance implications if something happens to people or your property while renters are there? Airbnb does offer what they call Host Protection Insurance, but that doesn’t always save the day. We reached out to our sponsor partners Antalek & Moore Insurance Agency to get some advice.
In this article, Susan Antalek Pagones and Vince Lemma weigh in with their industry insight. Susan, Vince, and the rest of the Antalek & Moore team are insurance agents, which means that they shop around for the best coverage and rates for different types of insurance you need (home, boat, RV, that sort of thing). They also go to bat for you when you need to file a claim.
Susan and Vince will take it from here with their guidance on the short-term rental insurance issue with Airbnb or any listing service:
Short-Term Rental Insurance is Not Black and White
From Susan Antalek Pagones, partner at Antalek & Moore:
This is such a complex issue that is not black or white, so it cannot have one single answer. All situations are different, and all insurance companies have different guidelines on short-term rental insurance.
Beacon typically has the one-room, one- to two-night stay situation. As opposed to a house on the beach, where beach rentals are usually weekly. In our pool of insurance companies we work with and recommend to clients, we have some insurance companies that have not addressed this difference as far as homeowners insurance coverage goes.
If there is an existing policy in force before the homeowner decided to Airbnb, or list their house or apartment as a short-term rental on any listing site, some insurance companies have not determined if there is or is not homeowners coverage. You would definitely want to call your insurance company to see what is covered. If something happens while you are not home - like if the renter starts a kitchen fire, or if someone visiting the renter slips and falls and tries to place a liability claim, or if a renter’s dog bites someone - you could be faced with a problem.
If a homeowner is searching for a brand new insurance policy, and if that homeowner offers a short-term room rental, we have insurance companies that will not entertain that risk. If the insurance companies do allow for it, they may have limitations on the amount of time the homeowner can rent annually.
Other factors come into play regarding insurance. Is there a pool or pond on premises? Will food be served? These sorts of questions will be asked by insurance companies considering taking on the additional risk of short-term rentals.
Homeowners Insurance Really is for Natural Disaster Coverage, Not Short-Term Rentals
Vince Lemma, partner at Antalek & Moore, weighs in regarding coverage beyond what is typically covered in a homeowners insurance policy. Here is what Vince says:
Homeowners insurance was originally designed to protect your home against natural disasters, like a fire. Homeowners can get additional liability protection insurance if someone is injured on your property. While Airbnb does offer its own insurance, we have had a client who was still sued by a renter and their homeowners insurance paid, not Airbnb’s.
If an insurance company will entertain the idea of a homeowner renting their home on a short-term basis, then they may require notification before the renter comes in if it is not a regular occurrence. The insurance company may require you to purchase a special policy, in the form of an Endorsement to cover the rental time, which could be added onto your baseline homeowners insurance policy for that one-time event.
There is case law that gives the insurance company the opportunity to deny the claim if the policy is written as a Homeowners Policy with no Endorsements to reflect the change in exposure. For instance, in the case of the kitchen fire above, if a renter is cooking and a fire happens on the stove, the insurance company might not accept that claim.
Do Your Research
Talk to your insurance company about whether short-term renting is included in your coverage. If it is not, and if the company finds out that you have been regularly renting out the house, the status could jeopardize any claims you need to make should an accident happen while renters are in your home.
Antalek & Moore can help you in this research, by finding out what policies would work for your situation to help guide you in future decisions. Call them at (845) 831-4300 with any questions. Visit their office on Main Street, at 340 Main St., just steps away from Beacon Natural Market and across the street from the Post Office.
