Have you ever dreamt of ditching the standard hotel room in favor of British castle or spending your vacation on a private island instead of a crowded resort? Thanks to home-sharing services such as Airbnb and HomeAway, either option is now attainable with the click of your mouse.
If the term “home-sharing” is unfamiliar to you, just imagine Uber’s business model with shelter taking the place of transportation. Home-sharing services are community marketplaces that allow people to rent out their houses, apartments, or even spare rooms to guests visiting the area. The practice offers travelers a unique alternative to hotels, and it can be a great way for homeowners or tenants to bring in extra money.
But while its benefits can certainly be extolled, the practice of home-sharing is not without risks. Whether you’re interested in hosting or renting, understanding how to best protect yourself from potential liabilities is the key to a successful home-sharing experience.
Host Risks
Hosting temporary guests can expose you to unexpected and expensive risks. Potential liabilities include theft, property damage, and the responsibility for guests injured while in your home. Generally, homeowners insurance covers your property, but gaps in coverage open up once policyholders begin renting out their homes. The majority of homeowners insurance policies are not designed to cover accidents arising from short-term rentals, as they typically exclude or provide very limited coverage for homeowners running a business through their residence.
Some home-sharing sites offer their own coverage, but it may not always provide the best level of protection. Airbnb, for example, offers a liability coverage policy of up to $1 million, however the fine print in their terms-of-service statement contains disclaimers that leave hosts, not the company, with the brunt of the accountability.
So what can you do to ensure you’re not held financially responsible for any damage your guest causes or any injury that befalls them during their stay?
Talk to an insurance advisor about your involvement in the home-sharing market and see what options are available to you. One possibility may be to purchase a landlord policy, depending upon the frequency with which you rent out your home. This covers your home, structures on the property, property contents such as appliances and furniture, lost rental income due to building damage, legal fees, and liability claims. As the popularity of home-sharing increases, some insurance companies have started to offer coverage designed specifically with hosts in mind. Your insurance advisor will be able to best assess which policy offers the level of protection you require.
Guest Risks
Hosts are not the only ones at risk in home-sharing transactions. Guests are also exposed to a number of risks when they agree to rent out a home, including loss of valuables due to flood or fire within the house, injury due to items within the house, hazards posed by staying in a home without such things as a first aid kit or carbon monoxide detector, and safety issues created because the building is not up to code. Homes are not held accountable to the same safety regulations as hotels and other businesses, so home-sharing guests need to be aware of potential threats within their surroundings.
Most home-sharing facilitators don’t offer insurance for guests, however travel insurance is a relatively affordable option that can protect you in case of emergency or injury while on a trip. Contact your insurance advisor to review your own insurance policies and those of the rental company. Your homeowners or renters policy will help you determine if you are liable for damages to the rental property or the host’s personal items. Generally, your policy will protect you should you happen to incur damage to your host’s property, but it’s important that you fully understand your coverage and potential liability.
The sharing economy only seems to be gaining popularity and traction. Before taking part in home-sharing, ridesharing, or any other peer-to-peer service, be sure your personal risk management strategy addresses the associated risks so you have the protection you need.
