Does Your Homeowner’s Insurance Cover Airbnb?

Renting out your home might be profitable, but your homeowners insurance policy may not automatically cover home sharing. Before you welcome temporary guests into your house, be sure you have the necessary insurance coverage to protect your property from damage and yourself from personal liability claims.

Homeowners Insurance and Home Sharing

Homeowners insurance often covers the expense of repairing damage to your property caused by fire, wind, or other natural catastrophes. It also provides personal liability protection in case someone is injured on your property.

The guidelines for home sharing are far less clear. According to the Insurance Information Institute, certain insurance providers will enable you to extend your homeowners coverage to a short-term rental if it is a one-time event and you notify the insurer in advance. Other businesses may ask you to acquire a specific endorsement, which is added to your existing policy to cover a temporary rental.

When Home Sharing Is a Business

If you rent out a portion of your home on a regular basis to earn revenue, the insurance provider will normally classify it as business activity, which is not covered by a homeowners policy. Instead, you would need to buy company insurance.

If you intend to rent out your entire property for an extended period of time, you will also require landlord insurance. Landlord insurance covers both the home and any structures on the land, such as a garage or shed. These plans often cover losses like fire or wind damage, but they do not cover damage caused by natural wear and tear or the loss of your tenant's personal belongings.

Home Sharing As a Renter

If you're a renter who sublets to someone else, you'll also need to cover your insurance bases. First and foremost, make sure your landlord enables you to sublet. From there, you should check with your renter's insurance carrier to see if your policy covers someone who is subletting.

If you are not expecting to live in the rental while subletting, the sublessee will need to obtain his or her own renter's insurance. Remember that if the sublessee damages any of your personal goods while you're abroad, your renter's insurance may not cover anything.

Which Companies Offer Home-Sharing Coverage?

In response to the expansion of the home-sharing sector, insurance companies are now giving short-term rental insurance to homeowners who rent out their properties on Airbnb and other sites. Here are three ways to get coverage:

• American Family Insurance—Policyholders can add short-term rental coverage if they plan to rent their homes for less than 62 days per year.
• Allstate—The company’s HostAdvantage Home-Sharing insurance is special coverage that protects your personal belongings when renting out your home. For example, you would be protected if a tenant stole anything or a criminal broke in while you were away. You would also be protected up to $10,000 if a renter accidently damages your furnishings or television.
• Airbnb—Airbnb offers host liability insurance as part of its AirCover for Hosts protection. This policy covers up to $1 million in third-party claims for personal injury or property damage. AirCover additionally gives $3 million in coverage for damage to your personal items or the house itself.

The Bottom Line

It is critical that you conduct homework before embarking on the home-sharing bandwagon. If you consistently rent out your property, for example, your insurance provider may dismiss you as a policyholder if it considers this to be business activity. Even if you're just renting your property once, you can't afford to lose your coverage. Talking with your insurance company about what is and isn't covered in your coverage will help you figure out what you need to fill the gaps.