Renting out your home, or a room in your house, for a short period of time has become a wildly popular way for homeowners to make some extra money.
Platforms like Airbnb allow homeowners to list their properties for rent, creating an alternative to the standard hotel room or suite. It’s a great way for renters to immerse themselves into a neighbourhood and is often cheaper than staying in a hotel.
There are also a few risks that homeowners should be aware of before turning to this avenue for extra income. Here are a few things to consider before listing your home.
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What is short-term rental insurance?
Short-term rental insurance, also referred to as home-sharing insurance or Airbnb insurance, is coverage designed to protect property owners and hosts who rent out their homes, apartments, or other properties on a short-term basis. These rentals would be listed on platforms such as Airbnb and Vrbo (formerly HomeAway).
Once a listing is created, the home is now considered a business property and has to be properly managed by the homeowner from the photos to the clean up, to establishing a price point, and of course – insurance!
What does short-term rental insurance cover?
Similar to landlord insurance, short-term rental insurance provides coverage for your property when you rent it out on a short-term basis. This coverage is specifically designed for home sharing and Airbnb and provides liability protection as well as coverage for all your items within the unit against damage, theft, and other perils.
Short-term rental insurance offers quite a bit of coverage and is perfect to supplement Airbnb insurance to limit the gaps in coverage. Here is some of what it includes:
- Damage by guests
- Theft by guests
- Loss of income from damage by guests making your property unrentable
- Legal liability protection
- Protection if guests use excessive water or hydro
- Lock and key replacement
Do home-sharing platforms have insurance?
Airbnb has its own insurance for hosts, a product called AirCover, but it is not recommended just to have that coverage. More is better and safer.
Once a rental listing is made, it changes the way the home is used, affecting the coverage and risk level of the home. While AirBnB provides some protection to hosts, there are still large gaps in coverage that should be addressed.
Aircover for Hosts provides coverage every time you rent out your property and includes a max of $3 million (USD) in damage protection, and applies to Canada. This covers damage to your property from Airbnb guests and will also pay for deep cleaning, pet damage, and replacement of lost or damaged art and valuables. Aircover will also help if you lose income as a result of the damage.
Update your home insurance provider
Homeowners who want to rent out their homes on a short-term basis must contact their current home insurance Licensed Advisor and inform them of their rental property intentions. Standard home insurance coverage does not apply to home-sharing situations.
Any theft or damage related to a home business is not covered by your standard home insurance policy.
Once your home becomes an income property, the terms of the contract with your home insurance provider have changed, and a separate policy will be required. Alternatively, some insurance companies allow customers to purchase ‘endorsements or riders’ that will extend coverage from their current home policy for an additional premium.
If the insurance company is not properly informed, the insurance provider can cancel the home insurance policy.
This applies to other situations such as home renovations and installing a pool. Once the home is altered, or being utilized in a different way, the insurance provider must be notified of the changes. And, it is recommended to do so before any work or planning has even started.
Protecting your profit property
In the end, it is important to make sure you have enough coverage to protect you, your guests, and your income property. Short-term rental coverage will adequately limit the gaps that Aircover for Hosts does not include and give you peace of mind while your income property works for you.
Are you looking to enter the market this winter? Give us a call today! The experienced real estate agents at Zoocasa are happy to guide you to the driveway of your new home!
