Can my insurance be cancelled by the insurer?

[Mike43]

My insurer told me they would cancel my home owners insurance if I rented rooms through Airbnb, since it was in violation of my contract. So I'm dropping out of Airbnb for the short term while  I review insurance alternatives. 

This made me wonder how many hosts are vulnerable to a pretty nasty surprise should they ever need to make an insurance claim. Suppose my house had caught fire, for example. The insurance company, had they uncovered evidence of me renting through Airbnb, could have denied my claim, regardless if it was a result of my renters or faulty wiring. If the fire had nothing to do with the renters, it seems unlikely Airbnb insurance would cover it either. 

Is this correct? Seems like a major risk many hosts are unaware of if it is true. 

As interesting side note, the insurer said Airbnb basically turns the house into a hotel. However, renting out a room on my own to two or less people is fine, regardless of whether it is long or short term. It is Airbnb that is the main issue for the insurance underwriter. 

[David126]

AirBnB covers a very wide range of risks from an Insurance persepctive, obviously there are millions of listings world wide. So if I was in Product Development i would be thinking whether first this was a business I wanted to get into, I am foing to assume a very niche market.

[Emily140]

Allstate:  please bring your product to California.

Who has found a decent program in California?

[Emily140]

So to be clear, there are two kinds of insurance I am trying to figure out:

1.  The normal coverage for something like high winds blowing a well-maintained tree onto your house and the damage it causes.

2.  The "additional exposure" to liability for human-caused damage of having guests in your property overnight or their injury as a result of an accident in your property during their stay.

I just read the NYT article which pretty well demonizes AirBnb hosts!  Not sure that is warranted... but raises many good issues.

One thing I have learned from my very short exposure to the AirBnb community is how APPRECIATIVE and GRATEFUL guests are for the opportunity to "live like a local," and these guests simply do not expect a brand new structure with every element of hotel-style construction and operation.  So that creates a spirit of community which reduces risk of frivolous lawsuits, but still a lawyer would laugh at me, so my question is... are "guests" agreeing, when they "book," to some kind of waiver whereby they acknowledge staying in someone's home does not guarantee/afford the same level of security as staying in a hotel?

Meanwhile, for my coverage concern #1, I want to find a homeowners' policy that won't seize on the opportunity to deny a natural disaster claim because I rented a room a few nights, or because I have a home office, or because I sold some of the peaches from my tree, or traded them to a friend for some eggs from her chickens.....

For coverage concern #2, for liability coverage, if you don't feel fully covered by the AirBnb Host Coverage and Host Protection, this looks interesting, found the link in comments on the NYT article referenced earlier:

http://www.peers.org/homesharing-liability-insurance-faq

[Evan35]

Just as happened to another participant in this chain, Travelers canceled our home / prop insurance once they discovered we are airbnb hosts. Hosting has been a 2 1/2 joy, we are onsite hosts in a large country house in NY state, we've become superhosts, all good -- until this.  Turns out Host Advantage and Mutual will not cover people on airbnb in NY state, but will other states.

We are still scrambling -- any ideas, anyone? We have an insurance broker looking but nothing yet. REALLy don't want to give up hosting, with met for the most part great people and of course the money's a fine thing.   Thanks, Evan

[Evan35]

Sorry to have been so incoherent above, thinking and typing too fast. I'm not really illiterate. Hoping to find ins. company that will cover airbnb participants for property and liability here in NY state.  Thanks, Evan

[David126]

@Evan35

Have you spoken with a broker who specialises in the B&B industry in your State? That would be my first thought.

[Evan35]

Good suggestion David, I've left it in the hands of our broker so far but I'm starting to do such target research myself, getting impatient.

EVan

[Troy22]

6/22/17

Hi Everyone--I'm so glad to find these comments and concerns--I thought I was the only one worried about this and trying to find short term rental coverage.  Here's what I have discovered so far from the Massachusetts perspective:

1.  You  MUST get short term rental coverage and switch insurers if your current insurance company doesn't offer it at all--if you want to host airbnb. 

2.  Also, get your auto insurance and umbrella policy with the insurance company that is providing your homeowners/short-term-rental coverage.

3.  Make sure the homeowners policy states that you are covered for short term rental IN YOUR STATE (and/or describes the terms of the short term rental coverage--e.g., Vermont Mutual's conditions:  that you must have a 2 night minimum (really!--this is a problem), that you must have a property manager and contract on file with the insurance company, that you are not limited to how many times you can rent to short term guests each year, that you must have a rental agreement on file with the insurance company, etc.)

4.  Vermont Mutual recently started covering short term rentals in Massachusetts, in addition to some other states like Maine--BUT VM does not offer this coverage in all states.

5.  Liberty Mutual gave me a crazy ride as I tried to find out if they REALLY offered short term rental coverage in Mass.  Turns out they don't--but say they are going to start this fall.  Not good enough if you need coverage NOW.

6.  Allstate has begun to offer short term rental insurance in some states but not Mass. 

7.  You must be persistent to make sure that the insurance company really does cover short term rentals IN YOUR STATE and you must see where it is declared in your policy and you must feel confident about the wording--otherwise you will be switching to an insurance company and not really have the coverage--and the insurance company will have your payments and trust but you aren't covered.  No loss to the insurance company but could be disaster for you!

8.  The short term rental insurance coverage is a SERIOUS issue not to be overlooked or pooh-poohed.  Not having short term rental coverage that fits airbnb situations and then going ahead and hosting through airbnb could ruin your life--you could lose everything, in addition to the harm done to guests who might be injured and need to be cared for.

9.  My understanding is that the Host Protection coverage from airbnb is IN ADDITION TO YOUR PRIMARY INSURANCE COVERAGE AND COULD BE DENIED IF YOU DO NOT HAVE PRIMARY INSURANCE WITH SHORT TERM RENTAL COVERAGE. 

10.  Please note:  most/many homeowners insurance policies without short term rental coverage allow you to rent out your home 3 times per year and still be covered--and cover you if you have a 2 family house where you have a tenant for a year or longer, e.g. 

11.  I hope more insurance companies will start writing short term rental/airbnb policies for homeowners in all states with a reasonable premium and good coverage.  Until then, you really have to beat the bushes to find what you need and verify, verify, verify that the coverage really covers you for short term rental in your state.  I think the insurance companies who start offering short term rental coverage early and do a good job for their clients could find that this is a lucrative market.

Good luck to all of us.  Thanks for these helpful messages.  Hope my info has helped you.

[Troy22]

6/22/17

Hi--Forgot to mention that Lloyds of London offers homeowners insurance with short term rental as well as auto insurance and umbrella coverage--but the premiums were huge--double what I had. 

Troy

[Barbara582]

Hi all,

I am an insurance broker and came about this discussion while looking for a solution for one of my clients, who uses AirBnb to rent out her property in Los Angeles.    I didn't realize what a huge problem this was until I started researching this myself!  In speaking with underwriters, I got an explanation of why the risk is assumed to be greater on AirBnb homes...   1) the home is more likely to sit vacant for periods of time which not only increases risk of theft, but also increases the likelihood that something like a leaky pipe will go unnoticed; 2) the liability of short term renters is greater in that you have more people coming through and more opportunities for trip and falls and other personal liabilty risks; and 3)there is less overall control over who is residing in the home because it is constantly changing.   For instance, while you might not rent to college students on a long term rental, you might rent to them on a short term rental.

Most of my preferred carriers  decline coveage for short term rentals in California.  I found two carriers that offer the short term rental endorsement that you need:  Lloyds of London, which came up earlier in this thread and is priced very high and American Modern, which was about 30% less than Lloyds.   On a property requiring $600,000 in dwelling coverage, American Modern quoted just over $2000/year.    I compared this to a Mercury landlord policy on the same property, assuming a traditional long term renter, and American Modern was about $650 more per year with the short term rental endorsement.

By the way, these are personal dwelling policies, not commercial.  You can and should buy a personal umbrella to extend your liabilty coverage even more.  

I hear enough horror stories in my business to make me pretty cautious when it comes to what I recommend for my clients.  One claim and you can lose everything - it's just not worth the risk.

Anyhow, I've never wrote on one of these discussions before but I hope this helped someone.  If you need any more advice or a good agent, here's my plug... Barbara Madvin, Gaspar Insurance 805-796-5711  barbara.madvin@gasparinsurance.com

Thanks!

[David126]

@Barbara582

I am not familiar with the CA market and just wondered if a Personal Umbrella would cover Commercial activities?

[Barbara582]

Hi David,

A personal umbrella only sits over personal auto and personal dwelling policies.  It excludes any business property, business auto or anything related to your occupation.  These would be covered under commercial and professional liability/umbrella policies.  

Depending on how many rental units are in a building, a rental may be written on a personal dwelling form, which is where most Airbnb rentals fall, versus an apartment building that would need to be written as a commercial property.

[David126]

You mentioned two primary markets who will write STR business under a Personal form, the issue I was thinking about was if the Markets you use for Umbrella coverage also follow the Primary in considering the STR business non commercial.

We have a worldwide audience here and Personal Umbrella is a US thing just so nobody gets confused, well maybe Canada as well not sure.

[Evan35]

Thanks Barbara, input on this issue from a professional is invaluable. My wife and I were inforned in late May that we were losing our Travelers home / property insurance because we airbnb hosts; we have another policy now but not one that covers us for this. So we've blocked out all of July and August on our airbnb Calendar, hoping we can find something to resume our hosting. We'll check out American Modern.

We've been airbnb Superhosts for several years, it's been a great and lucrative experience until this came up. We're particularly frustrated over this issue for two reasons: we are onsite hosts, so as we're here when our guests are, one would think this would mitigate some of the liability, and as our guests are vetted through airbnb -- we've had 43 stays and have turned down 3x that many requests, because the potential clients did not have reviews from other airbnbers -- well, isn't that a lot better than a conventional b and b, where you don't have any idea who's going to be walking in your door? It makes common sense to be that airbnb's model provides less risk to an insurance company for this reason alone, but of course I'm not in the business.

If you hear of anyone else who at a reasonable yearly price will insure onsite airbnb hosts with a large house and property in the State of NY (not NYC), please let me know!   Evan Sinclair zr2741@gmail.com  -- Thanks!

[David126]

@Evan35

AirBnB are just a booking service with a few bells and whistles, any vetting is marginal at best.

I would contact a Broker in your State who specialises in B&B's, perhaps contact the local Asssociation for recommendations.

From an Underwiting perspective there is a big difference between a STR operation and somebody living in their own house without paying customers.