The short and long-term vacation rental economy has gained popularity as a way to earn extra income on property that you own. It also comes with risks that can be costly without the right protection in place. You may find that once you decide to start using your property for vacation rentals, it is no longer covered by your home insurance policy. In fact, doing so could cause your coverage to be cancelled altogether. While AirBnB offers hosts some coverage, it is very limited and is likely leaving you exposed to a number of risks that could be costly to your income stream. Fortunately, there are other options available to you that can provide coverage specifically for vacation rentals.
Does home insurance cover vacation rentals?
If you have decided to participate in home sharing or regularly renting out your property for money, this means that you are using your property for business purposes and need commercial insurance in addition to your home insurance policy. When you change the occupancy of your property, you also change your risks and liability. Your home or condo owners’ insurance will not cover any claims that result from income-generating rental activity.
Why you shouldn’t rely on Airbnb’s protection
Airbnb provides automatic protection for qualifying claims through their “AirCover for Hosts”.
This coverage provides…
$3M USD in damage protection for the following:
- Damaged art & valuables
- Parked auto and boat coverage
- Pet damage done by a guest’s pet
- Income loss if you have to cancel bookings due to guest damage
- Reimbursement for extra cleaning services
$1M USD liability insurance
- Protection for third party injury or property damage to guests
Although Airbnb provides some protection, it is subject to their policy terms, conditions and exclusions and will leave you with gaps in your coverage. Additionally, the $1M USD in liability coverage that they provide is often not enough to cover all liability damages within a claim. Here are just a few things Airbnb does not provide coverage for:
- Damage or destruction of buildings and personal property outside of the categories above
- Damage from natural disasters
- Intentional acts, criminal acts, or failure to act by a guest
- Loss of rental income if the property becomes inhabitable
Who should hold rental property insurance?
- AirBnB hosts
- VRBO and Home Away property owners
- RentByOwner property owners
- Short term rental property owners
- Seasonal property owners
- Owners of vacation homes including cabins, cottages, summer properties, ski chalets, condos, villas, lake houses and holiday homes
- Rental property professional management companies
What types of insurance coverage are available to rental property businesses?
Property Insurance
Depending on the type of property you are renting out, your property insurance will vary. Whether you are looking to insure a house, condo or something else – we offer solutions for all types of property, buildings and their contents. Property insurance is essential and provides coverage for your property and its contents (including furniture and appliances) in the event of a covered loss such as fire, smoke, theft, vandalism, windstorms or water damage.
Commercial General Liability
Commercial General Liability (CGL) coverage protects your business from slips, trips and falls that may happen in or around your property. A common case could be someone slipping on your stairs or driveway leading up to your house. CGL also provides coverage for legal fees and lawsuits that can result from damage or injuries to your customers and their property.
Loss of Rental Income
The last thing you want it to not be able to receive rent from one of your properties. If your property suffers a loss or damage by a covered peril that makes your place uninhabitable, Rental Income can kick in to cover your rental costs during the repairs.
Cyber
Airbnb’s host coverage excludes electronic data from their damage and liability protection (including security cameras and systems). If you use an online system to store your business information and/or your customer’s information, your business is at risk to cyber exposures. If these systems get hacked, you could risk exposing confidential information or having your computer system shut down, resulting in major financial damage and downtime from your business.
Renting out your home should be a rewarding experience, which is why it’s important to ensure your property and revenue stream are adequately protected. Whether you own one property, or professionally manage a collection of properties, there are insurance options available to you.
Your Specialty Insurance Brokers
The brokers at Fuse Insurance will work with you to create an insurance package that covers all the risks that come along with renting out your property. We work with the top rental property insurance companies across Canada to ensure you are receiving the best possible rate and coverage in the shortest amount of time. To learn more about rental property insurance today contact our team at 1-866-387-FUSE (3873) or speed up the process by filling out your application online now.
Fuse Insurance is a licensed brokerage in British Columbia, Alberta, Saskatchewan, Manitoba and New Brunswick. We also offer sub-brokering in Ontario, Prince Edward Island and Nova Scotia.