As the lazy weeks of summer roll on, you might find yourself looking out the window, wondering what it would be like to be somewhere else, anywhere else, and you’re not alone – aside from mid-late December, the summer is probably the most popular travel season of the year. These days, however, hotels and resorts have some unexpected competition from home-sharing websites. The number of people using these services is growing quickly.
While to me it feels like paying for a discount hotel with no meals or room service, I’ll also admit that when you’re staying at someone’s home you *do* get a different perspective on the area where you’re vacationing.
That being said, let’s also look at this from a different perspective: the homeowner’s.
Maybe you already have a vacation property and you just don’t have time to use it this year – or you’re looking to offset its costs by renting it to vacationers via a share site. While it’s true the bank probably won’t care how you’re paying the mortgage, your insurance company would be VERY interested to know what’s going on at your place this weekend. If you’re part of a condo or co-op association, they may be interested as well.
First, with respect to insurance, it’s important to remember that your home or condo or co-op owners’ policy was written for YOU. It’s a contract between you and the insurance company. If the Smith Family from Gas City, IN are renting your Manhattan condo for a taste of the big city while you’re out of the country for the summer, and mom forgets to unplug her curling iron, causing a short, and starting a fire that engulfs the fifth floor, does your coverage apply? If your insurance carrier defines “Insured Person” as a homeowner or their family only, you may be paying off this loss out of pocket, until retirement and beyond – and that’s not even including the cost of lawsuits.
Your condo or co-op association may also have bylaws that prevent you from renting your property. Or they may be ok with it but have other complicated rules that you’re accustomed to, but your guests have no idea of. You could find yourself in a legal battle with some of your neighbors – hardly worth what you were making from your weekend guests.
Owners of one- and two-family homes aren’t immune from insurance concerns either:
What are your short-term tenants doing at your home? If they’re just coming and going, you’ll probably be fine, but if you have a grill, do they know how it works? If you have a pool, do you know if they’re planning a party? Or more importantly, do they know enough not to take their eyes off their toddler within ten feet of the in-ground pool before tragedy happens? An uninformed tenant can lead to more than just minor damage to an item – they could be a major liability exposure. Again, please refer to your policy’s definition of “Who is an Insured?”
Before you start posting favorable angles of the backyard on social media and advertising that you’ll be out of town a few days, you need to call your insurance agent or account manager and have them speak with your carrier. You should also think ahead and make some helpful how-to guides for renters to work with, for things like kitchen appliances, barbecue grills, and even your shower – you’d be surprised at how complicated some of those can be!
Your carrier might be ok with it as long as they know, they might ask you to add an endorsement that includes coverage for guests renting the home – not just for potential liability losses, but also for potential theft of or damage to your property. Or they might also respond that they aren’t comfortable with this at all and ask you to go elsewhere. “But that’s a hassle!” True, but it’s easier for us to find you a new carrier than it is for you to find your own attorney after your tenant’s guest trips and falls in your yard and sues you for negligence, and your carrier denies the claim.
A quick quasi-related note about using your car for ride-sharing as well: this is another case where you should have us speak with your carrier. They insured you to drive your car to and from work, not to operate as a taxi service. Again, they might be ok with it, they might be against it, but you have to have the conversation first, BEFORE the accident occurs.
A final note, this one for my friends who are Renters. If your landlord gave you a “No List” as long as a roll of toilet paper when you moved in (no smoking, no pets, no music, no pictures on the walls, no visitors after 8pm…) what makes you think they will be comfortable with you subletting the place to strangers for a weekend? Before you check with your insurance carrier, or make things awkward or awful with your landlord, *please* read through your lease to check if something like this is permitted. If you don’t speak any “legalese” and can’t understand it, ask a friend, or even one of us. The money you’ll make from sharing your apartment is not worth an eviction notice. If the lease says it’s ok, ask anyway, just to keep the property owner informed. Keep a record that you’ve spoken in order to protect yourself. The last thing you need, aside from a potentially uncovered insurance loss, is a landlord looking to put your stuff out on the sidewalk.
We are here to help and advise you. Please give us a call before you list your home as the newest exotic getaway in your hometown.
