Many people rent out all or part of their homes through property sites like Airbnb. Through the end of July, there were nearly 6,900 active Airbnb rental spaces available in the greater Montreal area alone, according to data from the industry analytics site Airdna. The numbers in other major Canadian cities tended to vary widely: about 4,900 in Toronto and 3,500 in Vancouver, but only about 900 each in Calgary and Ottawa.
In most cases, renting out a property on Airbnb is relatively simple and headache free, however renting to strangers can be a risky business and the owner does need to ensure they have the best insurance coverage, just in case problems arise. Many people rely on their standard homeowners` policy and are reassured by benefits such as the Airbnb Host Guarantee, however it appears that, for many people, this combination leaves them with gaps in their coverage.
Ask an expert
Given this is such a critical part of the decision-making process, we wanted to understand just how good this guarantee is, and precisely what it does, and doesn’t protect. Karen Roller, underwriting director at APRIL Canada, took a look under the hood of this guarantee to offer her thoughts:
“Firstly, I am pleased to say that the Airbnb Host Guarantee does add peace of mind to the process of renting out your home,” she said. “My interpretation is that it is designed to offer basic primary liability coverage for up to $1 million per occurrence in the event of third party claims, bodily injury or property damage.”
Roller added that some of the coverage gaps in question would probably come as a bit of a surprise. For instance, things like cash, animals, and shared areas on the property are not covered in the Airbnb Host Guarantee. In addition liabilities can become complicated further if a guest causes damage (eg water or fire) to a neighbor`s property and doesn`t have his own personal liability cover. Complications will further exacerbated if the guest is from a foreign country.
Further, it’s possible that if claims are made against standard home insurance policies to help fill those gaps, they could either be denied or lead to the policy itself being voided. This is because many standard home insurance plans explicitly prohibit use of property for financial gain without commercial insurance. Along similar lines, even when short-term rental hosts are doing their due diligence and inform insurers ahead of time about the change in plans for the property, standard home insurers might still cancel the policy.
And its worth remembering that few other websites offer coverage such as airbnb and even with Airbnb, guests who liked their experience might book directly with the host the next time, without going through the platform, thus missing out on the coverage. Instead, specialty insurers (like APRIL) can help. Their coverage fills the gaps that exist between standard policies and Airbnb’s
A closer look at the new coverage
When things are stolen or damaged by home-sharing renters, this emerging type of coverage will help ensure homeowners are protected. However, it’s also worth noting that in most cases, deductibles will still apply.
Of course, homeowners should always carefully examine their coverage options on a regular basis and determine if what they have now is right for them, whether they’re engaged in home-sharing services or not. This can help to give them a better understanding of what would and would not be covered in just about any circumstance that might arise and cause potentially costly liability issues that put them in financial trouble.