When purchasing a property, you need to determine how this decision might affect your financial stability. For instance, you need to think about how you are going to pay the mortgage every month. Plus, which type of insurance you should buy to protect your property. All of this becomes even more vital if you are thinking about renting out your home. If you’re in this situation, you likely want to learn how home insurance for Airbnb works.
Right now, many young homeowners are interested in making some extra income by investing in real estate. Some of them might purchase a home to rent it out all year long. But others might opt for a more popular option, such as using Airbnb. In case you are thinking about creating an account on this platform, it is vital to find out if your homeowner’s insurance will provide coverage.
In this regard, the situation becomes a little tricky. While some insurance companies will protect your property. Others will advise you to buy a whole new insurance for Airbnb. However, there is no need to worry. We will break down everything in the next sections.
What does homeowner’s insurance cover?
Before we talk about the coverage of home insurance for Airbnb. Let’s take a quick look at the protection that the policy offers for a property. As you might know by now, homeowner’s insurance covers all the cost in case your home was damaged due to a fire, lightning, wind and even certain natural disasters. However, the policy doesn’t end there. It will also help you pay for a lawyer and medical expenses in case someone was injured inside your house.
Then, you might be wondering what type of insurance do I need if I rent out my property? In general, you can stick to homeowner’s insurance since it will cover any damage done to the property. But, before accepting a renter, we would recommend you should make it clear that they need to purchase tenant insurance in order to use your property. That way, you make sure their personal belongings will be restored in case of peril.
To look into this option, read more here.
If you want to start home sharing using a platform such as Airbnb, this will be considered a business activity. This happens because insurance companies consider you are getting a regular income from renting out your home. In this instance, homeowner’s insurance will become invalid, and you will have to look for business insurance.
Is there any exception to the rule?
Even though, as we explained above, homeowner’s insurance does not cover you in case you want to start a home-sharing business, there is one exemption. The regular policy might offer you some protection for an occasional rental. That means it needs to be a one-time event, and you should notify your provider beforehand. But, to make sure you are covered, it is always better to speak to an insurance agent because some companies will require you to purchase an extra endorsement, even if you are just going to rent the place out temporarily.
Can I have an Airbnb if I am renting?
When it comes to home-sharing, there are many things that homeowners need to keep in mind, especially the risks. For instance, the possible damage to any personal belongings, vandalism or even theft. Plus, you should consider that the risk becomes even greater if you don’t purchase the right insurance policy.
If you want to get into this business as a renter, you need to think about the extra implications of this situation. The first thing you need to do is ensure that your landlord allows you to sublet the property. Then, you need to check if your renter’s insurance protects you in case of subletting. Further, if you are planning to stay somewhere else while subletting, the other person will need to purchase tenants insurance.
Now let’s look at some of the insurance for Airbnb hosts’ options.
Types of insurance for Air bnb
If you are looking for insurance for Airbnb, there are many possibilities you might want to consider depending on your budget and the kind of business you want to run. Here we are going to present to you some options.
- Airbnb insurance
Luckily, today some companies offer insurance policies for any Airbnb business. In the market, you could find them as short-term rental insurance, and this type of protection usually includes liability coverage, legal fees and any damage to your property. But keep in mind that if you are going to obtain a great portion of your income from this home-sharing business, you should invest in landlord insurance.
If you decide to purchase landlord insurance, you will have more coverage for any peril, additional structures of your home and liability. However, in case you are in the market for an Airbnb policy, we have the perfect one. The Airbnb host protection is perfect to protect you in case your guests damage something inside your home.
One thing you need to understand about Airbnb host protection is that technically it is not a standalone insurance policy, but it works well if you are using this platform. Remember, this should only be an add-on to your homeowner’s insurance policy. When it comes to claims, the process could be a bit long since Airbnb is the one responsible for the entire process.
- Business Insurance
Since home-sharing is considered a business activity, the best thing you can do is get business insurance. You will get coverage for the property, legal fees and any loss of revenue due to a peril. There is no way to have an approximate range of the cost of business insurance since it is highly variable depending on the type of activity you are performing and how risky it is.
There are numerous types of business insurance policies that you can find in the market, and each of them will cover different needs. Because you will have a home-based business, you could only need liability coverage. However, you should talk to an insurance agent about this. They will advise you about the best type of policy for your situation.
