VRBO and Airbnb Insurance

​A few years back the thought of renting out someone’s guest room or their house seemed like crazy talk. Why would anyone want to go and live with a bunch of strangers for any time? On the other side why would anyone want to rent out a home to a stranger? Fast forward to today and the popularity of VRBO and Airbnb has taken off and the questions about how to insure the homes properly have followed.
There was a time not long ago that vacation homes would sit vacant most of the time. Maybe a lucky friend could borrow the keys every once in awhile but other than that the homes would sit empty. Now, things have dramatically changed. People are listing their vacation homes on paid websites. In many cases they make enough money to pay the mortgage and maintenance of the property. There are also people out there that specifically invest in properties for the purpose of renting them out on these websites for a profit.
A few months back I went on a work trip and I rented a guest house for a week off Airbnb. One thing that was important to me was having my own space. I’m not cool with walking down and hanging out with Stew and Beth, those two creep me out! My guest house was a small studio with a kitchenette, a full bathroom, my own entrance and my own parking space. I also got a bbq grill to use.  It was the first time I had used Airbnb and I have to say I kinda liked it. I wasn’t stuck in a hotel for the entire week. Since it was a work related trip it was nice to have a fridge where I could put stuff for breakfast and lunch. And for dinner I threw a steak on the grill one night, I make some chicken fajitas another night. It was a nice quiet place with some conveniences of home.
I also discovered during my trip that the house I stayed in had a second unit on the other side. That one was also rented out. The main house on the property was also for rent on Airbnb. So, the property owner was definitely using this property for time income.
So, what are the insurance implications for these homes? The business of vacation rentals took off and the need for insurance products soon followed. At first people were trying to cover the vacation rentals with standard Homeowners Insurance and Rental Dwelling policies. But, those policies were not designed for the use these homes were getting. Now you can buy a policy specifically designed for the rental. Vacation Rental Insurance is a commercial policy that will cover the home, give you liability options and ways to protect the personal property you have in the home.
Generally, commercial policies are going to cost you more than a standard home policy. But, if the purpose of your rental is to create income then you need to factor the insurance as a cost of doing business. These policies are specifically designed to cover the vacation rental. They cover times when the home is vacant and when people are staying there. 
If you are just renting out the home or a room a few days a year to get some extra income you can do a few things. The first is buy the insurance through Airbnb or VRBO. Both companies offer insurance for when the home or room is being rented by guests. Their coverage includes liability protection and coverage for the home if it is damaged while being rented out. When the home is not rented out it would be covered under your standard home policy. One thing that the Airbnb and VRBO policy doesn’t cover is the personal property in the home. So, if someone walks off with your toaster or microwave or they put an aluminum can in the microwave and it burns up you have no coverage. Some homeowner insurance companies have been able to fill this void with an endorsement for vacation rentals. This endorsement will cover the gaps that the Airbnb coverage doesn’t have. Not all companies offer this so make sure when you are shopping for insurance you mention that you rent out the home. 
If you have a full time vacation rental make sure that you are insuring it properly. Don’t put yourself in a position where you have a standard home insurance policy and have a claim denied. Take some time and discuss your options with an insurance agent and make sure you are making choices that are protecting your assets. Call me with any questions at 951-395-0754