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  • Writer's picturePauline Handy

Renting Your Home or Condo? Take Precautions First

Updated: Jun 19, 2023

If you’re not well-prepared with the proper insurance and precautions, it could cost you.

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Do you believe your home or condo could make a perfect rental property? Many homeowners are now renting their homes while not being occupied, a trend that has grown into a multibillion-dollar industry. Before moving forward, it’s wise to learn about insurance as it relates to short-term rentals.

Local regs and ordinances

A good first step is to review the terms of your homeowners association (HOA) bylaws or local laws (if applicable), and check if your local community has an ordinance regarding short-term rentals.

You’ll also want to consider city-specific regulations. Understanding the laws and regulations in your town, city, county and state will help you avoid potentially hefty fines and even eviction if it's deemed illegal to rent your home in your area. Online marketplaces like Airbnb and Vrbo offer information to help homeowners understand the many considerations and practice due diligence.

Homeowners, renters and landlord insurance — what you need to know

Renting Your Home or Condo? Take These Precautions First. Be sure to weigh the benefits versus the risks before opening up your home to visitors.

  • What if your guest destroys your property or your neighbor’s landscaping?

  • What about damage to the common space in your condo building?

  • Who pays for injuries on your property? Are you liable?

It’s important to answer these questions before listing your property.

While an online brokerage company like Airbnb may provide a measure of protection, you may still be in for a costly surprise. For example, Airbnb offers up to $1 million in protection for covered property in the event that a guest damages your property and those damages exceed the security deposit, or no security deposit was collected.

However, the program doesn't cover cash, securities, collectibles, rare artwork, jewelry, pets or personal liability. Nor does it cover losses or property damage due to wear and tear, or replace your homeowners or renters insurance.

While you may think your homeowners or renters insurance will cover any damages, think again. Many policies will not cover property damage caused by paying guests or the costs of any injuries they suffer. Speak with your insurance professional to see if your homeowners policy will cover this and clarify the fine print of your policy.

Also, know that homeowners policies often exclude coverage for home-based businesses. Since it’s hard to say when occasional rentals cross over into official business, know that this could invalidate your coverage.

You may want to speak with your insurance professional about purchasing a landlord policy that helps protect you and your belongings.

It’s also advised that you rent only to guests who can prove they have homeowners, renters or personal liability insurance, as guests may have coverage under their own policy. Keep in mind, however, that homeowners policies often provide minimal liability coverage (for example, only up to $1,000) for damage to property of others.

Purchasing a customized policy, particularly with a “surplus lines" carrier, is something you’ll also want to explore. This type of policy covers risks that are considered unique. The surplus lines market provides insurance for hard-to-place, unique or high-capacity (high-limit) risks. Your insurance professional is a great resource for learning more and understanding whether this is the right option for you.

Prepare for guests

Before your guests arrive, be sure to warn them well in advance that they are responsible for all damages, and they are obligated to pay for any damages or losses. Have it in writing, and even reiterate this over the phone when you speak with them.

Renting your home can be a lucrative opportunity, but it also entails additional, complex risks that should be thoughtfully considered. If you’re not well-prepared with the proper insurance and precautions, it could cost you. Speak with an experienced and knowledgeable insurance professional before embarking on this new endeavor.

To learn more, 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 (203) 483-2988, or by using our Appointment Request Form.

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