Sunday, October 23, 2016

Home Sharing - The Risks

Home sharing platforms like Airbnb have created a new business opportunity and source of income for homeowners and tenants across the country.  However, there are risks for the occupant. The horror stories about assaults, condos being held hostage, theft and property damage are well known. What is often overlooked is the risk for the property owner.  If you are a building owner, you need to be aware of the following issues.

Who Is Staying There?

If you own a building and the tenants are on Airbnb, you could be exposed to serious risks. Unlike a traditional rental which requires a detailed application process, extensive information collection and verification about the tenant, home sharing allows free access to your property. Legally speaking, you have no contract with the Airbnb tenant and so you have little or no leverage if an incident should occur. Also, the rights, duties and liability limitation of the building owner in regard to a home sharing tenant are still a grey area.  That only increases your risk.

What about Renter’s Insurance?

Your tenants may assume that their renter’s insurance will cover them for any loss or damage caused by the home sharing guest they take in. It may do so, but it also may not. There is no guarantee on this and the protection available will depend on the specifics of each renter’s insurance policy.

What You Can Do To Protect Yourself

There are a few things a building owner can do to protect his interests. Key among them are:

  • Prohibit home sharing.This is the most comprehensive option. Have your lease agreements drafted to include the clause that the tenant is prohibited from using Airbnb or other home sharing services. In addition, it is a good idea to have an addendum to the lease agreement which clearly states the owner’s position in regard to home sharing and details the risk for the owners, the tenants and others in the building. The tenant must accept and sign the document.
  • Monitor Home Sharing Platforms. There could be some tenants who sign a lease that prohibits home sharing, but think that they can bypass it and share their homes on the quiet. It is easy to claim they have large families and relations keep visiting them. The best way to control this is to monitor Airbnb and other platforms to look for any listingsof the properties you own.
  • Consult Your Insurance Broker. Insurance is a complicated issue, especially when multiple coverages are involved. Where does the property owner’s coverage end and the tenant’s begin? Who is liable for what damage or loss caused by a home sharing guest? Only a professional will be able to clearly define where you stand and advise you on what additional coverage, if any, you need to protect yourself from loss or liability caused by home sharing.

Remember, home sharing allows people whom you, the property owner, know nothing about to occupy the premises you own. There are legal, financial and ethical issues involved and you need to protect yourself.

What You Need To Know About Rental Car Insurance

Despite the growing popularity of ride sharing, renting a car is often the only option in some circumstances. For example, if you are travelling or need a temporary replacement while your car is being repaired, sharing a ride, will not give you the mobility and flexibility you require. When using a rental, you need to be sure that you have the insurance coverage you need. Check your car insurance policy’s coverage to know where you stand.

Transportation Expense Coverage

An auto insurance policy is typically in two parts. Collision coverage kicks in when your car is damaged in an accident. Comprehensive coverage covers non-accident related damage or loss such a theft, fire, vandalism, etc. If you have collision coverage, the policy will pay for car rental after an accident. If you have comprehensive coverage, rental will be paid for if the vehicle is unusable due to issues covered by that coverage. If you have both, then you are protected under both circumstances.

How Much Reimbursement Will You Get?

Whether you get enough reimbursement will depend on the specific terms of the policy. For example, if you drive a luxury sedan, it does not automatically follow that you will be entitled to an equivalent rental car. The reimbursement could be only for a compact. Check the policy terms. It is not just a matter of driving a big car. If you normally drive with a car full of passengers, how will they fit into a compact vehicle? The difference between the reimbursement for a compact car and the rental of a larger vehicle which you need could burn a big hole in your pocket. If the transportation expense coverage is not enough, you can modify the policy to have the reimbursement increased. Ask you insurance broker for details.

Coverage While Travelling

Whether your car insurance policy covers you while you are travelling, either on work or vacation, depends on two factors -What coverages are in the policy and where you are travelling to. Check your collision coverage to see if you are protected. As for where you are travelling, in general car insurance policy cover travel and car rental anywhere in the U.S, its territories, Puerto Rico and Canada. The coverage will also depend on your deductible. If you have more than one vehicle on your car insurance policy, the lower deductible is what usually applies.

Do You Need The Collision Damage The Rental Company Offers?

You will normally be offered a Collision Damage Waiver at the rental counter. If you are already covered, you may not need it. However, if damage should occur, the rental company could require that payment for the damage be made when the vehicle is returned. You will get reimbursement from your insurance company, but that may take some time. And you need to have the money available to make the payment when returning the car. So, keep both issues in mind when deciding.

This is a complicated issue with a lot depending on the fine print of your auto insurance policy. If you are unsure of what coverage you have or want to know if it will be enough to cover a rental car you may use, talk to your insurance agent to get a clear picture of where you stand. You can then decide on increasing the coverage, if it is required.