Imagine this scenario: You’ve saved for months and can finally afford to head off on an exciting vacation for three weeks in the summer. But before you do, you set up an Airbnb account to rent out your home while you’re gone. After all, you have a nice home. You live in Manitowoc — it’s by the beach! You get a renter right away.
Everything’s set. The renters are in. Your vacation is wonderful.
And then you return home.
You find that the renters have trashed your home. The kitchen and bathrooms are a mess. Your television and stereo system are missing. And your leather couch and chairs have been slashed. Naturally, the renters are long gone.
What do you do?
Home Renting Horror Stories
This story is certainly meant to put a little fear in you about renting out your home or another property you own. But of course, most of the time, renters don’t act this way. Hosting platforms like Airbnb, HomeAway, and VRBO (Vacation Rentals by Owner) set up and see thousands of successful rentals every day.
Still, in the scenario above, what could you do to cover your losses? The answer is probably nothing.
That’s because, while sites like Airbnb do have insurance plans, these plans have many coverage gaps. Most of all, your property is not protected under these plans. If someone were to steal, destroy, or otherwise harm your property (your home, furniture, and other belongings), that’s your problem.
It states this directly on the website about insurance: The Host Protection Insurance from Airbnb is “… subject to certain conditions, limitations, and exclusions.”
Can I Get Additional Coverage?
At this point, most would-be renters go to home insurance. Surely, this will cover you in these scenarios?
The answer here is maybe, but not likely.
First of all, home insurance generally doesn’t apply to renters or guests. If this is a rare situation, your insurance agency may make an exception and allow coverage for your guests, but more often than not, they’ll ask you to get an additional level of insurance called an endorsement or a rider.
If you plan on renting your property out to guests on a regular basis, you’ll almost certainly need business insurance. An increasing amount of states across the U.S. are requiring business insurance for those who act as vacation rental hosts because the actual services they are offering constitute business activities.
Furthermore, if you have a second or third home and plan on long-term rentals (six months to a year or more), this actually requires a landlord or rental dwelling policy.
Naturally, these extra insurance policies will cost you. You can certainly make money renting out your property, but it’s important to weigh the costs and rewards to make sure you’re actually making a profit.
Additionally, there are other risks at stake. Namely, if you live in a home association or condo, many policies restrict home renting. Speak with your home or condo association board to know for sure. Furthermore, even if you don’t live in an association, neighbors may not be thrilled that you’re having various groups of people renting your home and coming in and out.
Speak With Your Terp Family Insurance Agent
The best way to know for sure that you’ll be covered if you truly want to go through with renting your home or property on a site like Airbnb is to first speak with your Terp Insurance agent.
From there, we can let you know what’s covered and what’s not, and if necessary, we can help you obtain additional coverage to meet your needs.