Wednesday, July 29, 2015

Homesharing Liability Insurance – A Necessity

The concept of home sharing grew out of necessity, when:
  • High-profile sporting events such as the Olympics, Wimbledon, US Open, French Open, Australian Open, F1 tournaments, Grand Prix, Tour De France etc, brought thousands of fans to a city or town, where the event was hostedand there were not enough hotels or resorts to accommodate all of them Homestays emergedas a more cost-effective option for tourists than typical hotels or motels
  • The proliferation of Universities, Colleges and B-Schools, and the need to accommodate a large number of students, created a gap
  • Home-owners, who sought to rent out a room or a portion of their home,to augment their income, stepped in
The concept and popularity of homesharing opened up a market, invitingattention and investment.A new breed of service providers capitalized on the trend, bringing home-owners seeking a renter and renters together,and managing the relationship as an intermediary. Prominent among these are AirBnB, HomeAway and VRBO. These ‘accommodation sharing websites’ have helped innumerable home-owners find short-term renters and havecreated an additional income for themselves.

However, opportunity breeds risks. There have been several cases of home owners experiencing theft, extortion, assault, or property damage (accidental fire or flooding, in the home) at the hands of their homeshare renters. To help home owners to protect themselves against damage and litigation, Insurance companies offer a ‘Homesharing Liability Insurance’.

A typical Homeowners Insurance Policy, covers liabilities for bodily harm experienced by guests at your home. It does not cover a commercial or business opportunity, which most homesharing arrangements are. An exclusive HomesharingLiability Insurance policy provides higher and better coverage in instances when the rented area (or the entire home) has been destroyed by fire, accidentalflooding or acts of vandalism.

Coverage and Cost

Most Homesharing Liability Insurance policies work in tandem with Homeowners’ Insurance Policies and extend the scope,to cover:
  • Lawsuits from a guest for bodily injury (example: your homeshare renter slips on the floor and falls, injuring themselves)
  • Lawsuits from a guest for property damage (example: your homeshare renter’s TV is damaged due to huge electrical spikes causedby improper earthling
  • Loss of income as a result of damage caused to your home by your guest (example: your guest accidentally sets a fire that engulfs the rented area and portions of your home)
Typical Homesharing Liability Insurance policies offer
  • Up to USD 1 million in Commercial General Liability insurance for bodily injury or property damage incurred by the homeshare renter
  • Reimbursement up to USD 5,000 for 90 days of lost rental income in case your rental property is severely damaged by the actions of your guest; and when the damage exceeds $10,000
Homesharing Insurance Policies are very cost-effective with premiums starting at USD 36 per month. There are options to pay in advance for the entire year, or every month,to suit your convenience.

Home-owners and Umbrella Liability Insurance policies do not provide cover when the homesharing arrangement is intended to generate income. In the absence of an exclusive Liability Insurance, you can be at risk from the actions of your homeshare renter.

Reduce these risks, reach out to an insurance company that has the expertise to guide you and help you with getting the right cover under the Homesharing Liability Insurance policy.

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