Home Sharing: 4 Ways to Better Protect Yourself
There has been a recent rise in transactions that involve opening your home to strangers who are traveling for vacation, business, attendance at local events, or other reasons.
These transactions may include sharing (renting) your entire home to people from different parts of the country, or it may involve renting only rooms in your home to provide a bedroom, sofa bed, or futon, and sometimes breakfast as part of the transaction.
Whether you live near Churchill Downs and rent your home out to people traveling for the Kentucky Derby, sublet your Warehouse District loft in New Orleans for Mardi Gras, or offer your Hackensack, NJ home to people traveling to New York City, you could face some unique and unusual financial risks by doing so. Same goes if you’re a homeowner and rent your home to racing fans during the Saratoga Springs horse-racing season, which runs eight weeks in late summer.
Many homeowners work with established organizations like Airbnb or HomeAway to conduct their house sharing transactions. In most cases, these peer-to-peer (P2P) home sharing transactions go off without a hitch.
That said, you might find yourself exposed to substantial financial risks if something happens to your home or if one of your guests is injured on your property during your home sharing transaction.
The four tips below will help you enjoy better protection until the industry develops consistent standards for addressing the unique needs of homeowners (and renters) who participate in P2P home sharing opportunities.
1) Understand Your Insurance Policy
It’s best to get to know your current policy, coverages, and limitations before you become involved with peer-to-peer home sharing engagements. The better you understand your policy, the better prepared you are to protect yourself in areas that aren’t covered by your existing policy or areas where you may need to consider fuller coverage. The best policy when dealing with insurance is this: “If you don’t know, ask.”
While the standard homeowner’s policy could provide limited coverage, typically you will want broader protection than a homeowner’s policy, depending on the financial risk involved. In other words, your current insurance protection might not cover any damages, lost property, or liabilities that occur. That is why it’s so important to protect yourself and your property.
2) Contact Your Insurance Company
Different companies will have different rules in place for what is and isn’t covered by their policies during business transactions. Some will vary according to how many times you share your home within a year.
For instance, if you only share your home for a single event or occasion, your insurance coverage may extend to the person renting your property. If you live in a city that’s expecting a one-time event like a Super Bowl football game and is experiencing an unexpected shortage of hotel rooms to accommodate the new traffic properly, this might be a viable one-time solution your insurance will cover.
On the other hand, if you intend to make this a regular event, you might discover that your insurance company feels you need broader protection. They may prefer you to consider additional insurance endorsements that include things like tenant’s content insurance or home share insurance, or a complete business insurance policy for your home.
3) Define Your Business Plan
You need to have a plan in place before talking to your insurance agent. What this means is that you need to know how often you’d like to participate in home sharing activities. If it’s a unique experience or occasion, your insurance company may view it one way, and they may take a different position if it is something you intend to do regularly. It is better to err on the side of caution rather than to find out, at a critical moment, that you do not have the insurance coverage and protection you believe you do.
4) Consider Increasing Your Liability Coverage
Don’t just increase your liability coverage, but do make sure you have the right kind of liability coverage to meet your home sharing needs. If your company doesn’t have an appropriate coverage option available, switch to one that does. It’s that important.
As someone who brings more people into your home on a regular basis – even when you may not be there to supervise what’s going on, you’re exposed to greater liability risks. The added protection will bring peace of mind and may be a financial life jacket when trouble looms on the horizon.
Protecting yourself better is what a good insurance policy is all about. If you’re engaging in home sharing, it is good business to make sure you have the right kind of protection from the beginning.
Many insurance companies now use standard endorsements that remove most coverage in the homeowner’s policy for home-sharing host activities. If you’re sharing your home in this manner, we urge you to contact our office here at Insurance Center of North Jersey to make sure you have all the necessary insurance coverages in place to protect you before you need them. We also can help you determine what coverage, if any, is being provided by the home-sharing network company you are using.