Thursday, November 21, 2019

Rental Unit Owners Risk It All

For most people, their home is their biggest asset. It is cherished, protected and maintained to the best of their ability.  Obviously, this costs money and when a way to monetize this asset appears so that apart if not all the upkeep costs can be defrayed, it is an opportunity that many homeowners jump at. Even otherwise, the additional source of income is something homeowners don’t want to let go of. This is one of the reasons why Airbnb has seen such phenomenal growth over the last few years. A second or vacation home may be lying empty for a good part of the year. Why not turn it into a rental with Airbnb and earn some money when the owners are not using it? If the owners are empty nesters with more space than they need, why not turn part of the home into a rental and make some extra money? There are many reasons to sign up with Airbnb and the process is a simple one. Only a few people think of the risks involved. After all, the rental space is not being used, the valuables have been removed and if anything should be damaged, there is always insurance to cover the cost of repairs is how people reason. Unfortunately, that is not the case.

The Risk

The people who will live in your home are strangers. Sure, they have come through Airbnb so they have been checked out, at least to some extent. But that is no guarantee that they are really who they appear to be. It could be that they are the sort who simply don’t care about other people and their property and will treat the home they are staying in with contempt, leaving the owner with a mess to clean up after they have gone. Or they could be the nicest of people who have unfortunately had an off day which results in accidental damage to the home and what is in it. In the worst-case scenario, the actions of the short term renters could lead to the home being badly damaged or even destroyed.

The Protection (Or Lack of It)

All homeowners have these thoughts in mind when giving control of their home to strangers. However, they also believe that the one-off possibility of bad things happening is no reason to lose out on the easy additional income as even in the worst case, Airbnb insurance and/or the homeowner’s policy will cover the damage or the loss. However, this is not the case. In a recent incident, Airbnb insurance refused to pay when the renter of a $1 million home burnt it to the ground. The home insurance policy declined to pay because the home was being used for business purposes which is excluded from the coverage.

The Solution

What homeowners do not realize is that they need extra coverage if their properties are being used as Airbnb rentals. There are special vacation rental property policies that offer the owners the protection they need. Few insurance agents are aware of or understand this coverage. If you are renting out on Airbnb, contact an insurance broker who is aware of the protection that is available to you and will help you find the right coverage to keep you and your home protected.

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