Does Your Homeowners Insurance Cover Airbnb?

Renting your home can be lucrative, but your homeowners insurance policy may not automatically cover home sharing. Before you open your home to temporary guests, protect your property against damage and yourself against personal liability claims with the right insurance coverage.

Homeowners Insurance and Home Sharing

Homeowners insurance generally covers the cost of repairing damage to your home caused by fire, wind, or certain other natural disasters. It also offers personal liability protection in case someone is injured while on your property. If you have a mortgage loan, your mortgage lender will likely require you to buy homeowners insurance.

However, the rules can become murky with home sharing. Typically, homeowners insurance does not cover property damage or liability if the home is rented out. In other words, if the renter gets injured in the home or damages the rental unit, your homeowners insurance won't cover it.

Insurance Rider

Some insurance companies may allow you to extend your homeowners coverage to a short-term rental if it’s a one-time event and you notify the insurer ahead of time. Other companies may require you to purchase a specific endorsement or rider, which is added to your existing policy to cover a temporary rental. 

Additional Liability Insurance

Some states have added requirements, such as laws mandating liability insurance. For example, Massachusetts requires homeowners to have a minimum of $1,000,000 in liability coverage for each short-term rental.

If you're using a hosting platform like Airbnb, check to determine if you're covered under their host liability insurance and whether that coverage meets or exceeds laws of the state where your home is located.

When Home Sharing Is a Business

If you’re renting out part of your home on a regular basis to generate income, the insurance company generally views that as business activity, which is not covered by a homeowners policy. Instead, you’d need to purchase business insurance. 

If you plan to rent the entire home for an extended period, you'll also need landlord insurance. Landlord insurance covers the home and any structures on the property, such as a garage or shed. These policies typically cover you for losses such as fire or wind damage, but they won't reimburse you for damage caused by normal wear and tear or for the loss of your tenant’s personal property.

Home Sharing as a Renter

If you’re a renter and you sublet to someone else, you may face additional insurance requirements. First, be sure that your landlord allows you to sublet the unit. From there, review your renters insurance policy to determine whether your coverage applies to subletting. Renters insurance usually covers the tenant for property damage, losses due to theft, and liability costs if someone is injured.

If you’re not planning to live in the rental while you’re subletting, the sublessee would need to buy renters insurance for themselves. Remember, if the sublessee damages your personal belongings while you’re away, your renters policy may not cover it.

Which Companies Offer Home-Sharing Coverage?

In response to the growth of the home-sharing industry, insurance companies are offering short-term rental insurance for homeowners who rent out their homes through Airbnb and similar sites. Here are three ways to obtain coverage:

• American Family Insurance: Policyholders can add short-term rental coverage if they plan to rent their homes for less than 62 days per year.
• Allstate: The company’s HostAdvantage Home-Sharing insurance is special coverage that protects your personal belongings when renting out your home. For example, you’d be covered if a renter steals something or a burglar breaks in while you’re gone. You’d also be covered if a renter accidentally damages your furniture or television, up to $10,000.
• Airbnb: Airbnb offers host liability insurance as part of its AirCover for Hosts protection. This policy provides up to $1 million of coverage against third-party claims of bodily injury or property damage. AirCover also provides $3 million in coverage for damages to your personal property or the home.

The Bottom Line

It’s vital that you do your research before jumping on the home-sharing bandwagon. If you’re renting out your home consistently, your insurance company could drop you as a policyholder if it considers that to be a business activity. Even if you’re renting your home just once, you can’t afford to jeopardize your coverage. Talking to your insurance company about what is and isn’t included in your policy can help you determine what’s needed to fill the gaps.