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AirBnB and Short Term Rentals: Are you Insured?

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Homesharing and seeking passive income through short term rentals has boomed in popularity in recent years, with companies like Airbnb and Homeaway leading the charge in the Canadian market. For homeowners this can be an easy and lucrative way of leveraging their real estate assets to supplement their income. However, homesharing comes with a substantial amount of risk since most home insurance policies do not cover homesharing claims. Before you sign a short term contract here’s how to make sure you and your home are properly insured.

Making the switch from homeowner’s insurance to landlord insurance

Homeowner’s insurance covers the activities of the homeowner themselves, with liability coverage for their guests and family. But when a guest becomes a paying guest, your insurance policy must be changed accordingly. Once you start charging for access to your property, you are considered to fall under a different risk bracket and will be advised to switch to a business insurance category.

Failing to declare your new status as a landlord can put you in danger of having your homeownership insurance policy cancelled.

What are your options for coverage?

As the home-sharing industry expands, several insurance companies have made a move towards including coverage for homeowners who rent out their homes or part of their homes on short term rental platforms. Here are some examples:

  • Airbnb Host Protection Insurance  Airbnb provides their hosts with up to $1 million of coverage against third-party claims of bodily injury or property damage. Additionally, Airbnb also provides a Host Guarantee, which will reimburse you up to $1 million  for damages to your personal property or the home itself.
  • Aviva Canada– Aviva’s home sharing insurance is available across Canada and can be added to an existing policy to purchased as a standalone coverage for a rental investment property. Aviva’s coverage includes loss and damages to the host’s personal belongings, damages to the property, liability, loss or damage of the guests’ property up to $1,500, and loss of income if the unit can’t be rented out while it’s being repaired.
  • April Insurance – April offers insurance packages for Airbnb and HomeAway hosts, as well as home exchange hosts. Condos and secondary or seasonal homes are eligible for the program as well.
  • Wawanesa Insurance –  Offers tenant insurance and commercial insurance for property assets.

Don’t take the risk!

It’s vital that you do your research before signing a short term rental contract, even if you don’t plan to pursue home-sharing on a consistent basis. Talking to your insurance company about the risks and boundaries of your current homeowners policy will help you decide what’s needed to protect yourself in your new role as a landlord.

 

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