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Home insurance advice required


#1

Hi there,
Has anyone had experience with changing their home/contents insurance to landlords insurance for a short period of time? I’m going away for three months so trying to work out whether i need to (i probably do) and if it’s worth me shopping around for a better quote with landlords then switching back to home/contents when i return. My insurance company weren’t very helpful…

Thanks in advance!


#2

Our insurance company wasn’t very helpful either. They said that it would need to change to commercial. The concept of the sharing economy is still really new and I don’t think they have caught up with the times yet. We are relying on the AirBnb insurance currently.

Does anyone have other suggestions?


#3

If you’re going to be renting your place on Airbnb for short term stays, most residential home insurers will not insure you for this because they consider that to be a substandard risk. They will most likely advise you to seek commercial insurance instead. If that is the case, the cost on an annual basis is likely going to be quite high, especially when compared to a residential policy. This will also depend on where you live and what the insurance market conditions and appetite is like there. I’m speaking from a Canadian perspective. The US may have more leniency due to more market competition.

With the Airbnb host guarantee, I would also be very leery about relying on it.

These are some important points to note:

  • You MUST complete and file an Airbnb Host Guarantee Payment Request Form with Airbnb within the earlier of fourteen (14) days following the end of the guest’s booking OR the date of which the next booking for this same accommodation begins. If you do not submit this form within the time period set out, Airbnb will not pay anything out.

  • The Airbnb host guarantee is PROPERTY DAMAGE COVERAGE ONLY, and does not cover liability. This means you must get separate liability coverage to cover you in case a guest slips and falls and hurts themselves, your dog bites a guest, the guest burns their hand while cooking in your house, or any other accident or injury that befalls that guest while on your premises. Airbnb WILL NOT cover you for any liability. They also exclude the following property:
    - cash and securities
    - collectibles
    - rare artwork
    - jewellery
    - pets

  • A police report is encouraged in all cases and is required for payment requests that exceed US$300.

  • Not all countries have the host guarantee in place - check Airbnb’s website to see if your country is eligible.

  • "You must use your best efforts to seek recovery from the Responsible Guest for any Covered Losses. If you are unable to recover such Covered Losses or damages within a reasonable period, then you must seek recovery to which you may be entitled, from any person or entity other than the Responsible Guest or Airbnb, with respect to such Covered Losses. " In insurance talk, this means that Airbnb’s policy is excess coverage and you must first try and resolve the issue with the guest and then seek compensation from your home insurance policy and only if you’ve exhausted all property coverage from them, can you then submit a form to Airbnb requesting compensation. This still does not guarantee that Airbnb will pay out as they adjust every claim individually.

  • If you do not inform your insurer that you are renting your home on Airbnb, whether you live there at the same time or not, and something happens, your coverage can and most likely will be deemed void because this represents a “material change in risk”.

There is no clear cut direction on this as Airbnb’s reps have said they will pay out before a host seeks compensation from their own home insurance policy but I would strongly recommend not relying on this. Since this is a fairly new area, it is not very clear what Airbnb’s host guarantee is really meant to cover and what they will pay out if claims are submitted. The safest bet is to talk to an insurance broker and get the right coverage in place if you do decide to go ahead with being an Airbnb host. Of course you will have to weigh whether the amount you make from Airbnb exceeds the extra cost of insurance.

If anyone has any more questions or needs more clarification, please be sure to let me know!


#4

Thanks for that. I’ve spoken to my insurer and they won’t cover for ‘holiday rentals’. (I’m in Australia) they’ve advised i wont’ be covered as i’ve now advised them i’ll be away and suggested looking fro alternative insurance. * sigh* Anyone in Australia had better experience?


#5

Any insurance company in Canada (that you know of) will insure for Airbnb type of usage?


#6

I’m looking into that right now. I have a friend who is an insurance broker so I’ll have him do some research and talk to some insurers and I’ll report back.


#7

Thanks for doing this research. I am considering hosting but am a bit concerned about the insurance issue.


#8

I just saw this article pertaining to more information about the AirBnb host guarantee and insurance.

AirBnb coverage does NOT cover:

Airbnb does not cover:

Collectibles
Cash and securities
Jewelry
Rare artwork
Pets
Personal liability
Damage in some countries (see Airbnb’s website for the areas covered by the Host Guarantee)

More details:

https://www.inmyarea.com/resources/insurance/airbnb-affect-home-insurance-rates/


#9

I got some info back from my friend who is an insurance broker. Here’s a summary of what he told me:

One residential insurer in Canada (CNS) will cover 2 boarders living in a home, provided that the owner also lives there. However the boarder(s) must be a long term one (i.e. over 30 days) so in the case of Airbnb rentals, this likely means that guests wouldn’t count as boarders.

It seems the only way to cover off this operation is to get a commercial policy, and the occupancy/operations would be deemed a rooming house. For a standard home valued at $300,000 (replacement cost), the annual cost would be roughly $1,700+ for the building and $750 for a $1,000,000 liability policy (total $2,450). Mainstream insurers view rooming houses as a substandard risk so you’d have to get a policy through a specialty company such as CanSure or Beacon. However, your insurance broker should know which specialty markets will write these risks.

If anyone needs more info or would like the contact for my friend to get a quote, please let me know. I hope this is useful for everyone! Let me know if you have any more questions and I’ll do my best to find out.

**Please not that this is only relevant within Canada and these are just rough estimates, not actual quotes. I’m not a licensed insurance broker and this is not a guarantee or offer of insurance.


#10

Thank you for this Cyn, very helpful.
We started booking out a room in our house on airbnb a couple months ago and the insurance issue had been nagging me. I finally got around to calling and can confirm what you and others stated in an earlier posts: our Canadian insurance provider (TD Meloche Monnex) will no longer insurance us if we continue our airbnb ‘business’. Based on your post, it seems that every underwriter will give the same answer and that the only choice is to seek commercial insurance–which will take a big bite out of the profits (though it is tax deductible). Though I’ve not looked into it, I would imagine that if you were to get rooming house insurance you would need to equip all rooms would then need locks and smoke detectors, plus install illuminated exit signs, fire exit maps and perhaps other safety features? Sounds like a nightmare.

Although our experiences thus far have been exceedingly positive, it would be very foolhardy for anyone to operate without insurance–especially liability.

My guess is that the overwhelming majority of hosts are uninsured and that something is going to give, and soon. Based on things I’ve read elsewhere, one should not be fooled into relying on the Airbnb Host Guarantee–even beyond it’s exclusions–as you cannot expect to get a payout from airbnb’s insurer if you do not have a proper home insurance policy on the property.

Does anybody else (in Canada) have anything more positive to report, have you found a company more open to the idea of short term rental, a la airbnb?

Thanks


#11

Here’s a Canadian who probably regrets not having insurance:
Toronto Condo Nightmare

Commercial Insurance will likely cover off airbnb rentals if you want “full” coverage. Yes, you need rooms that have their own locks, smoke detectors and fire extinguishers, but the real kicker is that commercial insurance plans typically have higher deductibles - they start at about $2000. As for the annual cost, including rebuilding coverage of ~$300k, $2000 - $2500 per year seems to be in the right ball park. Good news is that it is needed tax deductible.

Not great news for folks that would like to be covered, but I’m curious to know what other hosts are doing.


#12

Hi Cyn,
would love to talk to your insurance friend


#13

Anyone in the US found a good insurance carrier that has a reasonable commercial policy for AirBnB hosts?

I am negotiating right now with my insurance broker to research insurance options as a host, but having pretty bad luck - the only thing they can find is a $4500 commercial policy. Thanks in advance for anything anyone can share!


#14

Back when we were managing properties, we referred our owners to the HomeAway preferred partner, CBIZ: http://cbizspecialtyinsurance.com/vacation-rental/

They specialize in short-term rental insurance. Worth checking out and reporting back.


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#15

I have found the same problem here in Australia.
We have contacted many insurers. Yes, we can get ‘Public Liability Insurance’ but as soon we do our private ‘Home and Continence Insurance’ becomes invalid as we are deemed to be running a business. When we contact our ‘Home and Continence’ provider we are ‘escalated’ to the business insurance division… and you know where that leads $$$$$$.
There is a huge market for a low cost insurance for this market, can’t some broker get off their behind and produce a product. I can insure a horse, a cat, my income, a diamond ring, what’s so hard about a simple niche B&B + private insurance cover?


#16

Fendi - his name is William and his number is (604) 270-0168. You can let him know that I referred you. Let me know if you have any more questions.


#17

You can actually get commercial insurance deductibles that start at $1,000 but it’s dependent on the company and if they require a minimum $2,500 ded, you might be able to “buy-down” the deductible by increasing your premium.


#18

Do you have an email address for William - I would like to contact him if covers Ontario properties as well.


#19

Hi, I live in the UK and have had exactly the same experience. We’ve been renting our house when we go on holiday for a couple of years, and when we renewed our insurance this year thought to double check. Result is we have phoned at least 20 companies and CANNOT get insurance, so now are shopping renting on airbnb. The airbnb model has fundamentally flawed if this is the case. Airbnb customer service is completely useless on this - I guess they know that the whole business could collapse if this becomes widely known. If anyone has found a solution that is affordable I’d love to know. Anton


#20

I’m in Canada and a friend put me onto a company called Square One Insurance that says it will cover AirBnB hosts. I never know how much to trust what I’m told over the phone by an insurance salesperson so does anyone have insights for me on this? The fellow I spoke to said that I would be covered as an AirBnB host because my suite is self-contained, and the guest doesn’t have access to my part of the house.

The coverage does not include damage the guest causes to the suite (deliberate or accidental); theft of the guest’s luggage etc; and if the guest started a fire in the suite that burned the house down, that wouldn’t be covered either.

He said the usual homeowner’s liability coverage is in effect, so if the guest trips on an icy walk etc it would be covered. But he said the guest would be expected to have their own insurance (i.e. travel/medical I guess) to cover illness, theft etc.

Not sure what to make of this. I strongly suspect my current insurance company will not cover me because of the AirBnB… so am I better off switching to Square One, and if so would it be wise to have some kind of waiver for the guests to sign (that says e.g. they have their own insurance coverage)?


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