If you’re considering renting out your home or condo as a vacation rental, you’re not alone—this trend has become a multi-billion dollar industry. However, before you take the plunge, it’s essential to understand the insurance implications and legal considerations.
Legal Considerations
Start by reviewing your homeowners association or condo bylaws, as well as any local ordinances regarding short-term rentals. Make sure to check city-specific regulations to avoid potential fines or eviction if renting your property is illegal in your area. Online platforms like Airbnb and Vrbo provide resources to help homeowners understand the legal requirements.
Homeowners, Renters, and Landlord Insurance—What You Need to Know
Before listing your property, carefully weigh the benefits and risks. What if a guest damages your home, your neighbor’s property, or the common areas in your condo building? Who is responsible for injuries on your property? It’s vital to address these questions in advance.
While platforms like Airbnb may offer some protection, their coverage has limits. For example, Airbnb’s $1 million protection plan doesn’t cover cash, securities, collectibles, rare artwork, jewelry, pets, or personal liability. It also excludes damages due to wear and tear, and it doesn’t replace your homeowners or renters insurance.
Don’t assume your homeowners or renters insurance will cover damages from paying guests—many policies don’t. It’s important to speak with your insurance broker to clarify your policy’s fine print and explore whether you might need additional coverage.
Homeowners policies often exclude coverage for home-based businesses. Since it’s challenging to determine when occasional rentals become a business, this exclusion could invalidate your coverage. Consider speaking with your broker about purchasing a landlord policy to protect you and your property.
Additionally, consider requiring guests to provide proof of their own homeowners, renters, or personal liability insurance.
Prepare for Guests
Before your guests arrive, clearly communicate that they are responsible for any damages, and make sure this is stated in writing. Reiterate this over the phone to ensure they understand their obligations.
Renting your home can be profitable, but it comes with risks. Without proper insurance and precautions, those risks could be costly. Consult your insurance broker before you begin this venture to ensure you’re fully prepared.
For more guidance, contact us at Bulger Insurance to learn how we can help you navigate the complexities of short-term rental insurance.
