The dirty details of Insurance and what is REALLY covered and what is NOT.

[Steve3059]

Hi everyone.  I've had no success getting a straight answer to my question from either VRBO or Airbnb so I'm going to send up a hail-mary here and see if any of you know the solution to my question or know how to get to the legal department of Airbnb for a definitive answer.

I'm a homeowner who would like to rent his home out a few times a year.  My insurance company, State Farm, has indicated to me that under my homeowner's policy (which is not commercial since I live in the home) I would not be covered in the event, however unlikely, that my home burned down while a vacationer was occupying it.

This is not an acceptable risk by any stretch of the imagination and, as far as I can determine, VRBO and Airbnb's million-dollar policy is liability NOT property insurance so I (or you if you're in a similar position) would be sh##-out-of-luck in the event of a fire.

I'm reluctant to change insurance companies because, frankly, insurance is getting tough to get in some areas that are near fire threats (I am).

It seems to me that there would be a secondary policy on the market, by some company who would pick up the liability for a week or a month for a fee.  

Does anyone know a good solution to get out of this pickle ?  I would really appreciate your feedback OR a method to get to someone who knows.

[Brian2036]

@Steve3059 :

 I would appreciate this information also.

Currently my insurance company is unaware of the details regarding my house. It is difficult to obtain insurance on rural properties and many people here go without.

[Larry339]

Always advise your current insurer that you are renting your property If there is a loss and they are not aware they can deny your claim. There are secondary insurers but your current insurer must agree to the additional coverage and that you have a short-term rental. I suggest you check other companies in your locale and see if you can get one insurer to insure your residence and your Airbnb in one policy.

[Steve3059]

Thanks Larry.  My insurance company says they will not cover.  I would love to know of a reputable company that will pick up the coverage for a week, a month or whatever.

[Shannon692]

I have 2 rental properties. When I spoke to insurance companies some have a policy specifically for occasional short term rentals. It is a new thing bc so many people are doing Airbnb type things. It's important to be honest with your insurer bc if you aren't you won't be covered

[Megan822]

Our home is insured as a multi-family; as such our insurance covers it as such. However, you raise a really good question and I am now going to look a little deeper. 

Would your insurance deny the claim if you had a family member living there? Paid or not? 

[Steve3059]

Your last question raises another good question.  Also, what if you had a dog sitter or a friend house-sit while you're away.  I hate to be cynical/"realistic" but Insurance companies are under a lot of pressure and would not hesitate to throw you under the bus in many cases.  They've also insured themselves against all but the biggest claims as they will cancel you or raise your rates (a big amount these days).  Arrgggggg !   

I feel hand-cuffed.  

My insurance company, State Farm,  "says" that next year they will offer a rider for short-term vacation rentals.  I only intend to rent my house a few times a year for a week to a month.  They way things are going I'll need it to rent out to pay for the insurance premium 🙂

[Debra300]

@Steve3059,

If either you, your spouse, or either sets of your parents served in the US military, you may be eligible for insurance through USAA and their home owner's with the “Sharing Economy Endorsement” which covers short term rentals for home-sharing.

[Brian2036]

@Debra300 

Thanks for that information. I have been a USAA member for 50 years and I was unaware of that endorsement.

 I believe that USAA now writes policies for people who have no military service. 

[Brian2036]

@Steve3059 

I tried to copy some information from the USAA website but it didn’t work real well. I don’t know what it costs yet but I’m going to find out tomorrow.

Here's How Rental Property Insurance Can Help

Rental property insurance (RPI), also called landlord insurance, offers protection a homeowners policy may not provide, including the following:

• Income ReplacementGet reimbursement for lost rental income while your property is being repaired following a claim.
• Personal Liability CoverageGet legal fees paid and medical expenses covered for an injury or loss for property damage on your rental property.
• Home Sharing CoverageSee note1Help protect you and your home if you rent out a room or your entire house. We offer coverage you'll need as a home sharing host.

[Debra300]

@Brian2036,

There shouldn't be any additional cost, because it is part of the overall home owner's policy, and not a rider.  For my property in Georgia, there is no additional fee.  The only caveat is that stays cannot be longer than 30 days, and it must be home that the owner lives in at least part of the time.  This works well for us, because we split time between the US and St. Lucia (a location that USAA stopped offering coverage for back in 2013).

[Brian2036]

@Debra300 

Thanks again. 

I just lowered our maximum allowable stay to 28 days.

This will work well for us because we have a second home in Panama as well as another house on the same farm in Arkansas, so we can move around as necessary to accommodate guests.