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Bruce Sackrison

Bruce Sackrison is a Napa Valley Register columnist who will write about property and casualty insurance matters.

If you have ever accepted money for people to stay in your home, the answer is yes, keep reading.

Sally and Bob (our fictional family) owned a second home. It was small and tucked away in the most beautiful hidden and perfect place. It was their little vacation getaway.

It also became a wonderful vacation getaway for others.

First, it started with just a few friends, and a “leave more beer in the fridge than when you arrived” kind of arrangement.

They didn’t charge their friends to stay. And they had a traditional homeowners insurance policy to cover the property.

But one day, they decided to advertise on several of those well-known short-term rental websites.

They thought that this could be a simple way to make a few dollars to help with the maintenance and upkeep of their vacation home. It seemed simple. It was. And it worked.

It worked well, until one day, it didn’t.

A paying tenant slipped and fell and got hurt.

An insurance claim was filed and it was rejected.

Like most homeowners policies, the insurance company considered this “business use” of the property, and it did not cover the claim. They also canceled coverage.

What should Sally and Bob have done differently? What should they have known?

Homeowners, landlords policies may leave you with no coverage

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A homeowners policy may, in some rare cases, provide coverage if you rent to only a very occasional visitor.

However, each insurance company has different guidelines to define “occasional” renter. Often, these guidelines can be subjective. Often, you have no coverage at all. Not even for the one-off situation.

Homeowners policies were never designed to cover business activities, including rentals. You must check with your insurance agent before renting out your home.

I’ve also seen that people will purchase a “landlords policy” to cover their second home that is frequently rented out.

But this too is not the correct solution in most cases. Landlords policies are typically written for permanent rental scenarios, not short-term stays.

If you charge for

home sharing, you are running a business Pew Research says that 11 percent of Americans have used a home-sharing network at least once. That number is growing, and you may be tempted to cash in on this.

Please remember that the minute you advertise your home on Airbnb or a similar service, you are now running a business. If you have a paying guest in your home, your homeowners policy may not cover the following risks:

  • Your guest slips on the stairs and injures themselves. You may have to pay the entire claim out of pocket.
  • Your guest goes to sleep with a candle burning. The room catches fire, and there is significant damage to your home. Imagine having to repair all the damage out of pocket.
  • Your guest commits a criminal act. It can happen. They ransack your home while you are away. The theft of your personal belongings may not be covered.

These are just a few scenarios that can quickly go from hypothetical to real.

My advice: If you accept money, even one time, for someone to stay in your home... call your insurance agent today. Right now. Explain the specifics of your rental, and make sure you get the proper coverage.

There are excellent and affordable solutions to home-sharing insurance needs.

If you don’t have a local agent, send me an email or call me to discuss your specific situation. You can have the peace of mind you need today.

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Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates. He is at 707-931-0186 or bruces@sackifs.com.

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