A cautionary tale ---
I'm an example of lesson learned the hard way. I thought I would try out AirBnb a couple times. Had no idea the quagmire of insurance I had stepped into! Maybe 10 years ago, I had rented my guesthouse for 3-8 months at a time and in those days I added a "landlord policy" with State Farm, but this year when I did my first AirBnb rental I didn't think to call my insurance company because (1) I wasn't committing to the idea, was just trying it out, I screened folks by their profiles and ability to articulate the purpose of their trip, and (2) a friend told me that AirBnb automatically provides landlord liability coverage! Perfect. I rented a total of 13 nights to two guests this year. Then came the phenomenal winter storms in California; a ~200-year old Douglas Fir, maybe 150-200' tall was literally split by the once-in-a-lifetime high winds after the last storm, and down it came in spectacular fashion, right alongside my cute 100-year old cottage. Nobody was inside at the time. Just me here. I had expensive insurance from Travelers, through a local broker. Super pleased with myself I had decent limits and that I had paid extra for the "current-building-code" add-on in case any damage was structural, I did what few of us ever do who purchase insurance, I called it in, expecting this to be an undeniable covered event. Didn't read my policy carefully enough. We're talking about a big loss here, probably $5k-$10k just to remove the tree, then there's some damage to the cottage where the trunk scraped past it on the way down. And, I have plenty of evidence that I kept my trees trimmed, and a recent clear fire inspection showing no dead branches over the roof. Model insurance customer.
Travelers forces you to purchase a very high amount of "loss of use" coverage, so when the "catastophe team" adjustor came out, I asked this (young person from out of state, not familiar with construction nor CA building codes, recently transferred from the auto insurance division who could not help AT ALL in valuing the damages/loss to the structure), "How do you guys value the loss of use?" My question should have stopped there. But no, I said something like "Can we use the rate that I rented for when I rented the place through AirBnb?" Speaking of spectacular, what a spectacular dumb move on my part. I'm never going to lie to my insurance company, so, if they had asked, "Have you ever rented this out?" I would have answered yes, but he did not ask. Absolute proof, in my opinion, that I had NO IDEA that two prior rentals had violated some small print in my plan; I myself uttered the fateful words "AirBnb"... TRULY no idea this was a problem. Before he left, this out-of-state "catastrophe team" adjustor re-assured me everything seemed fine and said he was passing me onto a local adjustor who would come out asap to value the damage and he encouraged me to go ahead and start work on the place, gave me specific instructions for managing the tree work and documenting the number of workers and equipment used to meet their claim requirements. I don't think he realized there was a problem either. Or if he did, quite a good actor... He said he couldn't confirm for sure my coverage for all of the damage, "since I need to assign you to the appropriate person, but I don't see any problem." Ha! Do not fall for this. Do not believe ANYTHING they say until they give you a settlement offer. I thought "appropriate person" meant the new, local adjustor. Nope, it meant the "legal department." No adjustor ever came, the promised calls never happened; instead, I received a call about a week later (long after new adjustor was promised), saying I was being investigated by their legal department.... Totally blindsided that Travelers would seize upon this completely unrelated information to deny my otherwise valid claim.
Travelers appears quite self-righteous in denying all my benefits and rights under my paid-in-full contract because they don't cover "other structures" that are "held for rental." I'm fighting this, planning to get an attorney. In my opinion, my guesthouse is my space and not "held for rental." I would never rent it out full-time. I would never move my furniture out and allow someone to put theirs in and live their life in my guesthouse. I have turned down friends who begged me to rent it to them. People who are plenty pissed off at me for that. Sorry, not going to happen. I want my furniture, my control, my use for my friends and family when I need/want it. But, when convenient for me, for people who meet my criteria, for people who can articulate their reason for traveling here, who have good reviews from other hosts, I enjoy sharing the space short-term, and investing the funds in maintenance and improvements.
I am not stupid, I did not expect my homeowners policy to cover me for renter-caused damage or a renter claim against me; I am aware I don't have "Landlord liability" through Travelers, but denying a fallen-tree damage loss because TWO renters for 13 nights total before this unavoidable event??? That's insane.
So then I called my broker - there's another bit of advice, never call in your own claim! Always call your broker first even if, as in my case, you are 99% sure they don't know your name and don't have your interests at heart. My broker gave me a bit of a lecture about how rental property has special added risk of property damage that the insurer can't be expected to cover because the homeowner is not in control of the property. Nonsense. Not only does AirBnb offer liability insurance and host protection for property damage during an AirBnb rental, the AirBnb arrangement permits you (1) to set house rules and remove anyone who doesn't meet them, (2) to control the furnishings, (3) to control the maintenance schedule, (4) to choose your renters, (5) to deny anyone you think irresponsible, (6) to inspect the property before and immediately after short-term rentals and (7) to keep a key and enter during the rental if you have reason to believe something dangerous is going on.... in short, you retain FAR more control of your space than if you rented out a structure full-time to a "tenant."
The trouble, I am starting to see, is the old world insurance industry categorizes property as "Home," or "Rental" or "Commercial" and cannot adapt to a modern world and provide reasonable and flexible options due to (1) their insatiable greed, and (2) myriad arcane regulations that define what is and isn't a rental or tenant and all this doesn't accommodate a modern evolving concept of making better use of existing space by SHARING it through a self-vetting community of travelers, rather than building new hotels....
I'm impressed Allstate has a program - I wish it existed in California.
