The Airbnb Effect: How Renting Out Your Home Impacts Your Insurance

Listing your home on Airbnb or similar short-term rental platforms has become increasingly popular in many areas, including New York. While this can be a great way to earn extra income, it’s important to understand how listing your property may affect your homeowners insurance.

Understanding Coverage Gaps

Standard homeowners insurance policies are typically designed for owner-occupied residences rather than those being rented out. This means that when you list your property, you may unintentionally create coverage gaps, as insurers typically view rentals as business ventures and require alternative coverage. As such, if a guest causes damage or is injured during their stay, your standard homeowners policy may not cover the resulting losses.

Policy Changes and Endorsements

To address these coverage needs, you may need to update or enhance your policy. Some insurers offer short-term rental endorsements that extend certain financial protections to rental activities. Others may require you to purchase a landlord or rental property insurance policy, especially if you rent out your residence frequently or have multiple guests throughout the year.

Legal Considerations

In many parts of the country, specific regulations regarding short-term rentals may apply. Local laws may restrict or regulate how you can rent out your property, and failing to comply could impact your insurance coverage. Additionally, some insurers may deny claims if your rental activity violates local ordinances.

Proper Precautions for You and Your Property

Homeowners considering short-term rental opportunities can take the following responsible steps to head off potential issues:

• Review your current coverage to identify and understand any exclusions related to rentals.
• Contact your insurance provider to discuss your plans and explore available endorsements or policies.
• Understand local laws and regulations regarding short-term rentals in your area.
• Consider additional liability coverage to financially protect against guest injuries or property damage.

We’re Here to Help

Contact KJE Insurance Services today to discuss your unique situation and secure suitable insurance for your short-term rental property.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.