Many people are using a new way to make extra income throughout the year by turning their property into short-stay rentals. Signing up for a home-sharing service like AirBnB or VRBO is a fairly easy process. With just a few photos and some clicks, you can have your property on the website and have your own mini-hotel business up and running very quickly.
Renting your home could be a lucrative venture, but before you open your home up to guests, you need to make sure you protect your property against damage and yourself against liability claims with the right insurance coverage.
If you're renting out your home on a regular basis to generate income, insurance companies view that as a business activity, which is not covered by a homeowners' policy. The way you handle rentals can determine the type of coverage you need. For example, if you are renting your home for an extended period of time, you would need landlord insurance. This policy covers the home itself as well as any structures on the property, such as a garage or shed. They typically cover you for losses such as fire or wind damage, but they won't reimburse you for normal wear and tear of the home or for the loss of your tenant's personal property.
For reoccurring short-term rentals, you need to consider either business insurance or a comprehensive vacation rental policy. While these are not necessarily the least expensive types of policies, they are the best means for protecting against property damage as well as providing liability coverage if guests are injured on the property.
A typical vacation rental policy can include...
* Commercial Package Policy: coverage for buildings, contents, liability and income;
* Building(s): special cause of loss with replacement cost valuation;
* Contents: special cause of loss with replacement cost valuation;
* Commercial general liability insurance coverage;
* Income Coverage: actual loss sustained business income with no time limit;
* Liability coverage continued to amenities: swimming pools, hot tubs, watercraft, bicycles, docks, etc.;
* Enhancement coverage: theft, damage to rental caused by a guest, animal/pet liability, etc.;
* Additional coverage options: libel or slander, accidental damage, wrongful eviction.
Some of the vacation rental sites offer "host protection" insurance. However, these policies are very limited in scope and leave major gaps in coverage. If you are considering using your home as an income-producing asset, be sure to contact your J.P. Perry Insurance agent to adjust the coverage you need to protect you and your property.