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Homeowner’s Insurance Coverage: An Issue For Those Who Home-Share?

12/18/19

By: Emily Williams

With home-sharing on the rise, homeowners should know what their insurance policies cover and exclude and, perhaps, update their coverage.  A business pursuits/rental exclusion is included in most homeowner’s insurance policies. A common form of this exclusion precludes coverage for losses occurring during a guest’s stay. A less common form might provide coverage depending on certain circumstances of the rental use –length or frequency of stays[1] or annual amount of rental income.[2] A rental endorsement may also be available. And, homeowners may need to buy additional types of coverage.
Some home-sharing sites offer insurance, but this coverage is usually minimal.  For example, under one form of Host Protection Insurance offered through Airbnb, there is no coverage for losses caused by pollution, fungi, bacteria, or intentional damage or injury, or for loss of earnings claims.[3] The coverage is liability insurance only, meaning that damage to the home or the homeowner’s property is not covered.[4] Airbnb also offers a so-called Host Guarantee in the event that a guest damages the home or homeowner’s property, but numerous exclusions apply, and this product is not insurance.[5]
Also available to homeowners is a commercial policy, such as a hotel or bed-and-breakfast policy.[6] One company, Slice Labs, has attempted to keep the costs of such insurance low through a product designed to provide on-demand pay-per-night home-sharing insurance, available to home-owners who rent through certain companies.[7]
Homeowners who use their homes as a business, or for a business, will want to have a solid understanding of whether and how they and their property are insured, or not, for the risks involved in such activities.
For more information about cybersecurity or breach response, contact Emily Williams at ewilliams@fmglaw.com.

[1] Kathleen Pender, Airbnb hosts face conundrum when it comes to insurance, San Francisco Chronicle (March 24, 2018), https://www.sfchronicle.com/business/networth/article/Airbnb-hosts-face-conundrum-when-it-comes-to-12778219.php

[2] Ron Lieber, A Liability Risk for Airbnb Hosts, The New York Times (December 5, 2014), https://www.nytimes.com/2014/12/06/your-money/airbnb-offers-homeowner-liability-coverage-but-hosts-still-have-risks.html)

[3] Airbnb.com/host-protection-insurance (see Airbnb Host Protection Insurance Summary)

[4] Airbnb.com/host-protection-insurance (see Airbnb Host Protection Insurance Summary)

[5] Airbnb.com/guarantee

[6] Coverage for renting out your home, Insurance Information Institute (last visited December 13, 2019), https://www.iii.org/article/coverage-for-renting-out-your-home

[7] Slice.is/