Check Your Homeowners Insurance Before You Become a Home-Sharing Host
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 in 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. Most home-sharing and host apps allow you to control the pricing, hours and rules of engagement. But for everything you can control, there’s a lot you can’t.
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 looking to pay off your mortgage.
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 a number of days, the police might argue that they have tenant rights and can’t remove them from the premises. You’d then have to go to court to evict them.
Evictions and other profit-depleting liabilities
After you evict the guests and regain access to your property, you discover damage to the walls. Since the stay wasn’t fully authorized, your $1 million in coverage might not respond to the damage they caused. The exclusions on your $1 million host policy mean you’re unlikely to win a lawsuit. 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.
Insurance options for home-sharing liabilities:
Ask your insurance broker to review what’s covered under your homeowners policy before you open the door to a home-sharing guest.
Know your insurance exclusions
Some home-sharing services advertise a no-worries approach to homeowners, but you should worry.
Using one home-sharing service’s insurance policy as an example, here are some things that may not be covered:
- Animals, livestock and pets
- Standing timber and crops
- Watercraft, drones, aircraft and satellites
- Property owned by someone other than you
- Weapons
- 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)
- 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 mould, 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 gig.
Don’t leave your home protection to chance.
- Contact your broker about your home-sharing plans.
- Confirm your homeowners coverage.
- Purchase home-sharing or property owners insurance.
- Investigate tenants’ rights laws in your municipality.
- Invest in a home monitoring system (but be clear on laws about consent and filming guests).
- Consult a lawyer so you know your options if a lawsuit arises.
- Verify that home-sharing is legal in your municipality (because 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 broker. They can advise you on how to proceed. So when it’s time to stake your claim in the home-sharing marketplace, think of the thousands you could make in profit and savor the millions you’ll save in liability.