Over the last few years, an entirely new way to add to household income has entered the market place. It’s called the “sharing economy.” This is an exciting and profitable industry but far too often homeowners forget a crucial step: insurance.
According to Forbes: “The sharing economy is currently worth about $26 billion and grows bigger each day. Even with regulations meant to curb short-term home rentals like the latest ones in New York City, homestay companies like Airbnb and Home Away continue to grow.”
“The sharing economy is a real trend,” says Joe Kraus, a general partner at Google Venture. “I don’t think this is some small blip. People are looking at this for economic, environmental and lifestyle reasons. By making this access as convenient as ownership, companies are seeing a major shift.”
While there are many pluses to a home or rental on a sharing site like Airbnb, there are also negatives that can move a financial gain to the minus column.
A potential Airbnb host writes, “I talked to my insurance company about adding coverage that would be needed for this use and was unpleasantly surprised to find out that if I do Airbnb, they will not cover me at all. They would not pay claims related to Airbnb.”
A homeowner’s or renter’s insurance policy does not mean a property or homestay guest is covered. It’s important to cover both personal property and belongings and to protect against potential litigation in the event that someone is seriously injured or dies on a property.
The failure to disclose home sharing activities to an insurer can be the reason for policy cancellation, even retroactively after a claim.
Misconceptions and confusion abound in the world of insuring short-term home rentals, but contact Risk Innovations and our experts will help you break it down.