Check Your Home Insurance Before You Home-Share Host.
Updated: Jun 19
It's tempting for homeowners, especially those with secondary homes, to consider joining the home-sharing community. However, if you rent out your home through a home-sharing service, you might not be covered under your homeowners policy or the service's. Learn about the insurance options for your home-sharing liabilities.
Are you offering your home on a home-sharing service? Most home-sharing and host services make renting out your house easy. They even offer $1 million in insurance coverage as part of their service. Like most people, you might ask yourself why you’d need more than $1 million for insurance.
It’s not the coverage amount as much as what that $1 million truly covers.
What could go wrong?
While making some extra cash sounds exciting, the liability that goes with it could cost you more than it’s worth. As with most home-sharing and host apps, you control the pricing, hours and rules of engagement. But for everything you can control, there’s a lot you can’t. That's all the more reason to check your home insurance before you home-share host.
The home-sharing guests who became unwanted tenants
Imagine you’ve signed a deal for a four-week family vacation. The credit check comes back clean, the prepayment clears and the texts you’ve exchanged are nothing short of a pleasure. They’re looking for privacy and quiet. And you’re savoring the profit margins that offset your annual mortgage cost by 40%.
But your dream guests refuse to leave and won’t pay. After week four, the family vacation turns into an overstay-cation.
Your perfect guests become a long-term nightmare
You seek assistance from the home-sharing service, but the most they can do is allow you to charge extra for the unauthorized days. You go to the police. Because your guests have resided in your home for over 30 days, the police tell you they may have tenant rights and can’t remove them from the premises. You’ll have to evict them in court.
Evictions and other profit-depleting liabilities
After you evict the guests and gain access to your property, you discover damage to the walls. Since they weren’t authorized guests, your $1 million in coverage might not respond to the damage they caused. The exclusions on your $1 million host policy and homeowners insurance make a lawsuit win unlikely. In the interim, you have to pay out of pocket.
You turn to your homeowners insurance, but they deny the claim because home-sharing is a business operation.
While extreme, this example is based on a true story.
Know your insurance exclusions
Some home-sharing services advertise a no-worries approach to homeowners, but you should worry.
Here are some examples from a home-sharing policy of things that are not covered:
Animals, livestock and pets
Standing timber and crops
Watercraft, drones, aircraft and satellites
Property owned by someone other than you
Security cameras and other recording devices
Losses that happen after the original booking period ends
Losses or damages that exceed the policy’s limit
Loss of or damage to fine arts (You may only get actual cash value, not agreed value.)
Extreme weather events and acts of nature
Excessive use of utilities
Interruption to your business (even if it was due to guest damages)
Deterioration due to delay
Compliance with local ordinance or law repairs
Identity theft and identity fraud
Acts of war, terrorism, insurrection and rebellion
Actual or threatened malicious use of poisonous biological or chemical materials
Nuclear reactions, radiation and radioactive contamination
Seizures and destruction under quarantine
Contraband and illegal trade
Damage caused by insects, animals and vermin
Losses directly or indirectly arising out of or relating to mold, mildew, funguses, spores, viruses, bacteria and other microorganisms
Denied coverage twice? It’s possible
If the home-sharing company denies your claim, you could be unprotected. Your homeowners policy might also deny your otherwise legitimate claim because you didn’t tell them about your home-sharing.
Don’t leave your home protection to chance.
Contact your agent about your home-sharing plans.
Confirm your homeowners coverage.
Purchase home-sharing or property owners insurance.
Investigate the tenants’ rights laws in your town.
Invest in a home monitoring system (but be clear on laws about consent and filming guests).
Consult a personal injury and liability lawyer so you’ll know your options in a lawsuit.
Verify that home-sharing is legal in your municipality (illegal home-sharing could void your homeowners policy).
Protect your home and assets
Before you take a trip down liability lane all alone, make sure you enlist the help of your insurance agent. They can advise you on how to proceed. So when it’s time to stake your claim in the home-share marketplace, think of the thousands you could make in profit and savor the millions you’ll save in liability.
To learn more about this topic, contact the team at V.F. McNeil Insurance for an appointment. We have access to several fine insurance carriers and have the collective experience you need to get you the right insurance from day one®. We can be reached at (203) 481-2684 or by using our Appointment Request Form.