Renting out your home on a short-term hosting platform like HomeAway, Airbnb, or VRBO may seem like a great idea. But is it?
Read on to learn more about the possible insurance complications you may face if you plan to rent out your property.
Understand There Will Be Gaps in Coverage
The most important thing to note about renting out your home on a short-term hosting platform is that the hosting platform’s insurance will almost certainly not cover everything. There will be gaps in coverage.
Most likely, these gaps will have to do with your property. If any accidents or damage occurs to your property during a rental, it will not be covered by the short-term hosting platform’s insurance.
What About Your Homeowners Insurance?
It’s natural to wonder about homeowners insurance at this point. Can a home insurance policy make up for the gaps in coverage left by hosting platforms? The short answer is no.
If you did not notify your home insurance Agency that you’ll be renting out your property for-profit, any claim you made under this policy would almost automatically be denied.
Still, the answer is not just to notify your insurance agent. It’s possible you may need to purchase additional coverage to cover yourself if you plan on renting out your home.
This can go one of many different ways. In some situations, for example, if you only want to rent out your home once or twice, it’s possible your insurance agency will work with you to provide you with coverage. More often than not, you’ll need something called an endorsement or rider — added insurance to cover your renting periods.
If you plan to rent your property long-term (renting out to multiple parties over a series of weeks or months), these transactions will constitute business activities, and you’ll be required to purchase business insurance.
Additionally, if the periods of rental you’ll be offering your tenants will be longer than six months, you’ll likely need landlords insurance, and this brings about a whole host of other legal hoops to jump through and complications. You should also keep in mind that these additional insurance policies can be expensive.
Cleaning Up the Mess and Dealing with Neighbors
Finally, you need to think long and hard about the move you are making in your life. While it may seem like a great idea to make some extra money off of property you already own, it’s not as easy as it sounds.
Renting out a property comes with a lot of responsibility. You’ll need to organize your property to be rented, making sure all amenities are included. You’ll need to list it and be in contact and on-hand with potential renters. Furthermore, you’ll need to be available for your renters if anything goes wrong while they’re staying with you. And afterward, you’ll have to clean up.
Of course, an additional complication is that of your neighbors. Many neighbors are not thrilled by the idea of having a home on your street rented out to strangers. And if you are part of a condo or home association, it may not be legal to rent out your home according to the association’s bylaws.
Speak to Your Agent Before Renting Out Your Home
If you have been considering renting out your private residence or a second home in or around Rolling Meadows, IL, before following through, it’s wise to speak with an insurance agent. That’s because all insurance agencies are different, and moreover, all insurance policies are different. You shouldn’t simply expect that you’ll be covered in the event of an accident or intentional damage to your property.
At AFI, we would be happy to talk with you about your insurance options and assist you in weighing the pros and cons of this endeavor.