As the summer months creep up, many of us are planning short getaways to neighbouring towns/cities. If you're a homeowner, this might be a profitable time to turn an honest penny with a short-term rental. While you prepare to open your personal space to strangers, it might be wise to consider protecting your assets and liability. According to statistics provided by Aviva Insurance, 51 per cent of Canadians are unaware that their home insurance does not cover the losses or damages incurred by short-term rentals.
Many of us have heard shocking stories of disastrous experiences with travellers who have trashed or completely eradicated short-term rentals. We are here to remind you that there are options when it comes to insuring your place. So, before you prepare to hand over your key to travellers, here's a breakdown of insurance options available to you as a short-term home renter.
What is a short-term rental?
A short-term rental is when an individual sets their full home or a portion of their home up for rent. The rental can be organized on a temporary basis, multiple times to different renters throughout the year. This form of rentals means there's a high volume of foot traffic to the host's property. Because your property would be exposed to many guests, it's important to consider the potential hazards to your personal property.
Host protection insurance
As a property owner looking to rent property on a short-term basis, you may resort to a home rental network. A home rental network is a digital platform, software or website operated by a rental network company that allows people to list, find and rent short-term accommodations. A popular example is Airbnb. Oftentimes these networks offer hosts insurance options. For example, Airbnb's Host Protection Insurance is a liability insurance program that may provide up to $1,000,000 USD in liability coverage for a host's legal responsibility to a guest or third-party that gets hurt or has their property damaged due to an incident related to an Airbnb stay. Host Protection Insurance provides hosts with primary liability insurance coverage, which mean it applies first regardless of other insurance policies a host may have.
The claim process follows the steps below:
- An intake form is completed: At this stage, a host, guest or third-party completes and submits the Insurance Program Intake Form.
- The insurer appoints an adjuster, who then reviews the claim: Once an intake form is completed, an adjuster - on behalf of the insurance company - gets in touch with the claimant to discuss the claim and gather details.
- The claim undergoes investigation by the assigned adjuster: The third-party claims adjuster settles the claim based on the terms of the Host Protection Insurance policy and applicable laws/regulations in any given jurisdiction.
Home-sharing insurance
Home-sharing insurance is designed for people who rent their homes on a short-term basis through a home rental network, such as Airbnb, Flipkey or HomeAway.
Home-sharing insurance covers:
- Liability arising out of the short-term rental
- Loss or damage to buildings and personal property
- Intentional acts, criminal acts or failure to act by a guest
- Loss or damage to a guest's property up to $1,500
- Fair rental value (loss of rental income)
When choosing a coverage option, homeowners can decide on the coverage they need based on their rental activity.
- Option 1: Rent your entire home for up to 90 days.
- Option 2: Rent your entire home for up to 180 days.
- Option 3: Rent a portion of your home (For example, a room or a basement) to multiple short-term guests year-round.
- Option 4: Rent your income property to short-term guests year-round. This coverage is available as a standalone policy.
Options one to three are available for homeowners, condo owners, and seasonal/secondary home and condo owners. Option four is only available for rental income property owners.
To be eligible, hosts must not be renting the place to one individual on an annual lease situation. The coverage is designed for hosts who rent their home or a portion of their home on a short-term basis, multiple times, to different individuals throughout the year. The rental must also be managed via a home rental network or a professional property management company.
How NFP can help
NFP is a leading insurance broker and consultant that provides specialized business and personal insurance, group benefits, retirement and individual solutions through our licensed subsidiaries and affiliates. Our expertise and market breadth enables us to match you with the best short-term insurance coverage available while taking into consideration your unique coverage needs.