Home-Sharing Insurance

Home-sharing is an alternative to hotels that allows visitors to a city to stay in a privately-owned room, apartment, or home. This phenomenon has exploded in popularity across the globe as an affordable alternative for travellers. Plus, homeowners can make some side income from their property. Home sharing isn’t without its risks, however – it was a nightmare for one Calgary family when they agreed to rent out their home for a group attending a wedding. Once the Calgary family returned home, they discovered their house in ruins. The group staying as guests in the home had caused roughly $150,000 in damages. Unluckily for this couple, home-sharing insurance was not yet offered in Canada.

While home-sharing can be a great idea and doesn’t usually go this wrong, it’s a good idea to be prepared for what happens if it does. For example, do you know if damage caused during home-sharing would be covered by home insurance? We’ll break down the impact of home-sharing on your insurance as well as your options for protecting yourself.

Is home-sharing covered by home insurance?

Your coverage may depend on your individual policy and your insurer. Generally, since you’re generating an income through home-sharing, your home insurance will not cover you.

However, more and more insurance companies do offer a special add-on coverage (“endorsement,” in insurance lingo) that will help protect you if you participate in home-sharing. There are often a few conditions, such as:

• You must list and rent your home through an approve home-sharing platform such as Air BnB.
• You can only rent your home for a particular number of days each year (to qualify it as a short term rental).

The conditions may change depending on the insurance company.

Do home-sharing platforms offer coverage?

The “Host Guarantee” from Airbnb is “designed to protect hosts in the rare instance of property damage to their possessions by a guest staying in the space. The Host Guarantee is not insurance and doesn’t replace your homeowner’s or renter’s insurance.” Therefore, only direct damage induced by a guest is covered by this policy. This means no liability, no damages to cash or pets, and no theft compensation. There is also Host Protection Insurance in a situation where a guest is injured on your property during their stay which covers up to $1,000,000 in liability. Other liability cases are not covered.

Other home-sharing companies offer similar insurance coverage to Air BnB, but it’s important to read the full terms and conditions to see exactly what’s covered. Every company is different.

While you’ll hopefully never need to use this coverage, there is the potential for a lot to go wrong with home-sharing: theft, damage, harm caused to your pets, someone getting hurt, getting sued and more. These are all costs you may have to cover out of pocket. Ensuring you’re protected with the home-sharing platform coverage and personal or commercial insurance will help reduce the financial burden on you if the worst happens.

What are my home-sharing insurance options?

Aviva and Wawanesa both offer their clients coverage for home-sharing with special add-on coverage. This protection includes:

• Damages or losses to personal belongings or the building
• $1500 worth of a guest’s damaged or lost property
• Any criminal acts or intentional acts by a guest
• Fair compensation for loss of rental income

Your premiums for this additional protection depends on how frequently you plan to have guests. Generally, you are only covered if you home-share through an approved third-party home-sharing service such as Air BnB.

If you plan on participating in home-sharing more than 60 to 180 days per year or have purchased a property exclusively for home-sharing, you should look into landlord or rental property insurance. This can provide comprehensive coverage for a home that you are planning on home-sharing long-term, including property damage and liability. This may help reduce the costs of paying to rebuild or repair the home and replacing furniture and other items owned by you. It can also help cover your legal expenses should you be sued by a guest. Many policies also include fair rental value, which can provide you with some financial help if you lose rental income during a covered loss.

Your insurance broker is an excellent resource if you plan on home-sharing: talk to them about your plans and they’ll help you review your insurance options.

Protecting Yourself While Home-Sharing

Opening up your home to temporary guests can be daunting. While most people will be great temporary tenants, there’s always the possibility of an accident or a bad guest. Here are some tips to help you protect yourself while home-sharing:

• Protect yourself with home-sharing insurance.
• Follow the rules laid out by the home-sharing company.
• Remove any valuables or things you don’t want others seeing or messing with.
• Change any passcodes/how to enter the home regularly (especially if you don’t personally give each guest a key).
• Have an inventory and review it after each guest.
• Leave a guide on how to operate everything, including heating, appliances, and the shower.
• Establish rules for your home and communicate them to guests.
• Check your home for hazards and perform maintenance as needed.
• Ensure smoke and fire alarms are working.
• Install a water alarm to warn you of potential water damage.
• Cover all electrical outlets except for one or two.
• Don’t put candles in the home.
• If you allow smoking in or outside of the home, provide ashtrays.

With any luck, you’ll have great guests and never need to worry about damage or someone getting injured. But accidents happen – and so do bad guests. Protect yourself and your home with the proper insurance coverage to reduce the impact on you should the worst happen. Talk to your insurance broker today to find out more.