What I Learned about Insurance - Proper vs Foremost vs AirBNB

Anya-And-Lukas0
Level 2
Massachusetts, United States

What I Learned about Insurance - Proper vs Foremost vs AirBNB

I know that Airbnb offers host  insurance. But I also have read many articles that say that it is not enough. And that your regular home owners insurance will deny your claims because of the “ business activity exclusion ” clause. I think that for minor claims I will trust the Airbnb coverage. But it is the big claims that I am worried about. As someone who has lived through a house fire, and the ridiculous insurance battles that followed, I believe in being “over insured”. Just because you think, “it will never happen to me” doesn’t mean it won’t.

 

When I called to ask my local insurance company about short term rental they confined that I would not be covered under my current policy. They gave me a quote for a new policy from Foremost insurance. But it was quite difficult to get my questions answered from my local agent.

 

I saw that Proper Insurance was recommended on many Airbnb sites and they specialize in home owners insurance for short term rentals. My agent Graham was extremely knowledge and compared his quote with the Foremost insurance quote I had received “apples to apples.” Here are a few things I learned.

 

Proper Insurance offers a commercial policy. The other quote was for a Landlord policy amended for short term rentals. A few of the benefits of commercial policy is:

 

Commercial policy has more liability protection. $1 million vs ½ million.

 

The Liability protection extended beyond the main premises. For example, you provide a kayak with your rental and someone has an accident on the lake. Or a renter brings a dog and they bite a kid at the playground. Or your neighbors house catches fire because your rental house caught fire.

 

Includes Professional and Advertising coverage. DOesn’t sound like something I’d ever need but he gave the example of you or your house manager entering the house when they think renters are gone. They sue you for invasion of privacy.

 

You have Liquor liability. Technically, if you provide alcohol to guests you can get sued if they serve underage people or have an accident. For example, you leave a bottle of wine as welcome gift. Or your previous guests leave a ½ a bottle of vodka they didn’t finish and you don’t remove it. You have provided liquor to guests.

 

There can be a big difference between actual cash value vs replacement value. Most policies will give you cash value for your old couch that was destroyed. Commercial policy gives you replacement value.

 

A commercial policy gives you $25k for backup and sewer claims. Other insurance does not.

 

For an extra $75/mo fee you can get Law and Ordinance Insurance. For example, there are costs to rebuild your older home and bring it “up to current code”. Or some areas have a law that if 50% of house is ruined you have to tear down the whole thing. But most insurance only covers the 50% that was damaged.

 

The policy does not cover you for flood or earthquake. There is some coverages for jewelry but not if the loss if due to “mysterious reasons”. For example, not a specific event or theft. For jewelry and art the agent recommend a separate policy from ART Insurance Now.

 

Based on this I think we will sign up with Proper Insurance. I think it provide better coverage it was even a few dollars LESS expensive.

 

HAS ANYONE ELSE USED PROPER INSURANCE?

 

 THis is the rep I am working with: 

Graham ****

Account Executive

 

[Personal information hidden for safety reasons]
65 Replies 65
Kimberly54
Level 10
San Diego, CA

Hi, @Anya-And-Lukas0,

 

The insurance topic is sooooo important.  Every insurance company is different.  My homeowners insurance initially panicked about running a BnB in my home.  I got a copy of the AirBnB insurance policy, faxed it to my insurance company, and had a series of discussions, both with two agents and the underwriter, and after careful examination of the situation, my company finally agreed not to require commercial coverage.  But our terms are VERY CLEAR, and I will NEVER deviate from our agreement, because in the event of a breach, I will NOT be covered AT ALL.  Play by our agreed rules, I am golden--on BOTH policies, and it didn't cost me anything... but certainly took a lot of discussion and disclosure.

 

Be wise. 

Kim

So your home insurance and Airbnb are sufficient?

 

Which company is your homeowners insurance with?

Sandy153
Level 5
Stamford, CT

@Anya-And-Lukas0

I just spoke to Proper insurance this morning and they DO NOT have a policy for Airbnb hosts who live in the home where they rent rooms. They are thinking about it for 2018, but right now, they ONLY offer policies for vacation homes or entire apartment short term rentals where the owner does NOT live in the unit.

 

Until there is a company with a policy for Airbnb shared homes, I will have to remove my Airbnb listing.  Airbnb should have a solution for this problem.

 

 

Hi Sandy. I've done extensive research into the subject of insurance for short-term rentals. There is one company that provides the solution you're after - it's called Slice Insurance. They're new and provide on-demand insurance, supplemental coverage only when you are hosting guests.

 

I did a full review of the Slice policy and published it to my website. If you're interested, you can find it here: https://www.sharingmyhome.com/category/trust-safety/short-term-rental-insurance/ 

@Sandy153, what you say is interesting.

We live in the home full time, and our AirBnB listing is inside our home.

Proper did not mention that this was not allowed when we were getting a quote from them (this was in early 2017).

 

Also the Proper Insurance FAQ page says this specifically:

What if I also live at the short-term rental, can I still purchase the Proper policy?

Yes.  You have the same business exposure.  We see every scenario imaginable.  You live upstairs and short-term rent the downstairs.  You live in the main home and rent out the guest house, etc.

 

So it sounds like they handle the situation you mention.

Who told you that Proper does not cover the situation where the host lives in the home where they do AirBnB rentals?

 

Hi Matthew,

I contacted Proper last October and an employee told me that they didn't have a policy for owner occupied Airbnb homes. I don't remember who I spoke to, and it may be related to my state of Connecticut, but that is what they told me over the phone.

I ended up finding a policy underwritten by Lloyd's of London via Reniassance Insurance in MA.

@Sandy153, thank you for the update!

It is no wonder this whole insurance issue is so confusing; even the people who work in the business are providing conflicting information to their customers.

I'm glad you found a place for coverage!

er Just talked with Proper today. They do not yet cover in home rentals unless the rental area is completely separate from the rest of the home.  They're hoping to add the rest before the end of the year.

 

They just reviewed our room rental plan and said they will not insure if we rent a bedroom and the guests share other living areas with us.

There is insurance for shared spaces such as yours.  Take a look at Slice insurance. 

 

Slice is only good for the renters for the booking time frame, as they take first position. When the booking is done your regular insurance takes first position again. Most regular insurances will drop you if they know you are short term renting in your home and it's  house share(you live there also) Slice will not cover you/yourself if you have a claim with no primary insurance. If something happens while you do not have a booking you are not covered by any provider.

David126
Level 10
Como, CO

I looked at Slice, signed up for it just to see the cost.

 

It is not a solution, a bit of a fudge.

David

Can you elaborate David. I too was curious on Slice, but, the cost seemed high and the coverage inadequate.