Homesharing and Homeowner’s Insurance

05 Feb Homesharing and Homeowner’s Insurance

Homeowner’s Insurance is now more important than ever. Homesharing and ridesharing have become major players in our evolving economy. However, the terms can be confusing and have more than one meaning. By now, you are probably familiar with AirBnB. Love it or hate it, it’s here to stay. Its purpose is to match supply and demand for housing related to traveling or, sometimes, special events. It allows a resident of a home, condo or apartment in one location to provide short-term housing to someone traveling through or vacationing in their city. The arrangement is facilitated through an online platform that provides the obligations of both parties to the transaction. Therefore, this discussion does not involve situations involving short-term trading or swapping of property in exchange for either similar residential space or in exchange for providing skills or services.

A wide variety of situations fall under homesharing:

• Rental of seasonally used property
• Rental of entire premises for vacationers
• Rental or part or entire premises for persons attending a local event
• Providing space for a special event
• Renting a portion of a residence while the property owner or regular renter still occupies other parts of the residence

While insurance policies issued for homes do take into account some situations involving other people staying in a residence, those situations are allowable when they don’t involve financial transactions. Renting for income turns a residential situation into a business. Business activity creates a coverage problem which could result in policies being cancelled or claims being denied. Renting all or part of a residence also results in types of losses that are uncovered because they haven’t been taken as insurable, residential activities.

Policy wording may exclude coverage for losses when they are directly related to a business. So, protection may be lost for the residence, residential property as well as for liability for damage or injury to others and their property.