YOUR HOMEOWNERS POLICY MAY NOT COVER SHORT-TERM RENTALS

If you read any sort of media, you know that rental services like Airbnb have really cut into the traditional hotel business. To paraphrase a commercial, why stay somewhere when you can live there? So you’re thinking that you live in or close to many tourist destinations. You have a nice house and short-term renters could really get a feel of real SoCal living. Plus, you can make some decent money while you are on your own vacation. But before you list your home, make sure you are fully covered by your insurance.

If you only plan to rent out your home once or twice a year, a standard homeowners policy will probably suffice. Some insurance companies may require a special endorsement. Either way, you should definitely notify your insurance professional about the rental. You may also want to consider mandating a renter’s insurance policy, as property belonging to the tenant would not be covered.

If you plan on renting out your residence several times a year on a regular basis, or have a vacation property for rental, this would constitute a business. Standard homeowners insurance policies do not provide any coverage for business activities conducted in the home. To be properly covered you would need to purchase a business policy—specifically either a hotel or a bed and breakfast policy.

If you are planning to lease your home for a longer period of time, say six months or a year, you will likely need a landlord or rental dwelling policy. f you are regularly renting out a vacation home or investment property, this would also require a landlord or rental dwelling policy. Landlord policies provide property insurance coverage for physical damage to the structure of the home, for any personal property you may leave on-site for maintenance or tenant use, and liability coverage.

Like any other insurance question, your best resource is your insurance professional. Don’t guess about your coverage, only to come up short when you need it.  Discuss your current policies and what they do and do not cover. Make sure everything is taken care of before you become a short-term landlord.