With summer approaching, many Massachusetts residents are planning to rent out their vacation homes or investment properties using a home sharing service. Before renting, it’s important to know whether your homeowners’ insurance covers home sharing and to consider any potential insurance implications. Some property owners have found out the hard way, after incurring a loss that their home share has no coverage. McSweeney & Ricci has protected homeowners throughout the South Shore and New England for more than fifty years and can help you understand the risks.
What is Home Sharing?
Home sharing services allow hosts to rent out their home or part of their home, cottage, condominium or apartment on a short-term basis through an online platform. Popular home sharing websites include Airbnb, VRBO (Vacation Rental By Owner), HomeAway, onefinestay, Homestay and FlipKey by TripAdvisor. The website takes care of booking and collecting the money from the guests.
In recent years, home sharing has grown in popularity. Amidst Covid-19 people looking for a safe way to travel, turned to home sharing rentals. Similarly, property owners who may have experienced financial strain during the pandemic, found a way to supplement their income by renting their property.
What are the Potential Risks of Listing My Property on a Home Sharing Website?
It’s important to consider the potential risks and insurance implications prior to listing your vacation home or property on a home sharing site. Some examples of the possible risks include:
- A renter may become injured or die while staying at the property,
- Guests could cause damage to your furniture or home,
- Renters could steal property from your home, or
- A fire could occur while someone is renting your property.
In order to safeguard yourself and your investment, protect your property with the proper levels of insurance protection for your specific needs.
Does standard Massachusetts home insurance cover home sharing?
Coverage varies by company and by the terms of the individual policy, but in most cases…no.
Standard homeowners’ insurance was designed to cover the cost of repairing your home after it’s been damaged due to covered perils such as fire, wind, and theft. Personal liability protection is usually included in home insurance in case anyone gets injured on your property. But, insurers typically view home sharing as operating a business out of your home, which complicates things.
If you’re renting your home, most insurance companies consider you a landlord and your homeowners’ insurance excludes any “business pursuits” or “business activity.” This exclusion means any claims related to business activity taking place on the premises would be denied. Therefore, in most cases, if your rental or its’ contents are damaged or any guests are injured during their rental period, a typical home policy will not cover your losses and you risk having your insurance canceled.
Renting Privately-Short-Term Basis
Home insurance coverage varies by company, and the specific terms of the policy, but your homeowners’ insurance may allow for a single or short-term rental of your vacation/secondary/investment property.
Most standard home policies will only allow a short-term rental if it is:
- A private agreement to rent,
- Not a VBRO, Airbnb or other “app-type” rental,
- Limited to full weeks. Not an odd configuration of days. (I.e., Two weeks or four weeks but not 2, 3, or 10 days.) and
- Not long-term tenants. The time frame is usually a maximum of 4-6 weeks.
Also, a requirement for many insurance companies (such as Arbella), is that they must also insure the client’s primary home in order to cover a short-term rental of the vacation home.
Massachusetts Insurance Options for Renting a Vacation/Secondary Home on a Home Sharing Website
We can’t stress this enough…we recommend contacting a McSweeney & Ricci representative prior to listing your vacation or investment property on a home sharing site. Your Account Manager offers personalized advice, and will ensure you’re protected by the proper amount and type of coverage.
If you’re interested in renting your Massachusetts vacation/secondary home on a home-sharing website, your insurance options may include:
Host Activity Home-Sharing Endorsement: Some of the insurance companies we represent (such as Bunker Hill/Plymouth Rock and Travelers) have designed home-sharing endorsements, that can be added onto an existing homeowners’ policy. Vermont Mutual has a home-sharing coverage option available via a commercial hybrid form.
These endorsements may be limited to a certain number of annual rental days and may also exclude some types of losses. Your McSweeney & Ricci Account Manager can discuss each option with you.
A Commercial Landlord Policy: For clients who would like to regularly rent their home using VRBO or any other “app-based” system, the National Association of Insurance Commissioners recommends purchasing a landlord policy to protect the home, structures on the property, property contents, legal fees and liability. Landlord policies are intended for businesses and as such, may be more expensive.
Dwelling Fire Policies and Short-term rentals
Some vacation and seasonal homes are protected by a dwelling fire policy, as opposed to a standard homeowners’ insurance policy. And many homes in coastal towns such as Marshfield, Scituate, Cohasset and Hull have this type of coverage.
Most insurance companies have very specific requirements concerning short-term rentals on dwelling fire policies. Most Dwelling Fire policies do not allow for “app-based” rentals and are intended mainly for annual rentals. The Massachusetts Property Insurance Underwriting Association (MPIUA) will allow short-term “app-based” rentals if:
- Time frame is a minimum of a week
- Total rental time is in week long increments (I.e., 1 week, 2 weeks, 4 weeks)
- Rental time doesn’t include any odd configuration of days. (I.e., cannot be for 2, 3, 5, or 10 days, etc.)
Do Home-Sharing Sites (Airbnb, VRBO, HomeAway, etc) offer Insurance to Hosts?
Most of the app-based home-sharing sites offer some type of coverage to hosts. However, this coverage is insufficient, as most do not cover damage to your property caused by a renter. The protection offered by home-sharing companies, cannot measure up to the comprehensive protection provided by traditional homeowners’ or renters’ insurance. Nor can they replace the expert guidance and personalized service provided by your dedicated Account Manager.
Call Us First
Before making the decision to rent your Massachusetts property, (either privately or through an app such as VRBO or Airbnb), contact McSweeney & Ricci. Your Account Manager will review your insurance needs and guide you towards the ideal coverage for your unique situation.
For over fifty years, thousands of Massachusetts residents have turned to McSweeney & Ricci Insurance for trusted advice and comprehensive home and vacation home insurance, renters’ insurance, business insurance, and more. We’ve partnered with more leading insurance companies than most agencies our size, allowing us to select the best combination of coverage at affordable prices.
Your vacation home or investment property is an important asset, let McSweeney & Ricci help keep it protected for the long-term. Call us at 844-501-1359.