In today’s real estate market, being a homeowner doesn’t just mean having a place that’s yours to call home. It’s also an investment—and one you can steadily grow by renting out. It’s a great source of additional income that allows your property to essentially pay for itself, like the mortgage and maintenance costs.
And it’s not just long-term renting anymore. With the rise of platforms like Airbnb, many vacation-goers are opting for short-term rentals, swapping out hotel stays for the complete getaway experience and savings.
Are you thinking of renting out your home in Thunder Bay? Find out how to protect your real estate investment, and keep the rental income flowing.
Here, our insurance brokers break down the other side of the getaway experience you offer: how a short-term rental affects your home insurance and why you need short-term rental insurance.
Clearly, there is a lot to gain from turning your Thunder Bay property into a short-term rental. From the extra income to the steady stream of vacation-goers who can easily fill up your bookings, short-term rentals can be a goldmine. But it also comes with risks.
For one, offering short-term rentals means dealing with the comings and goings of so many different guests. It’s why many property owners and their insurers see an uptick in insurance claims. The volume of guests increases the risk of property damage, on top of the more typical perils like fires, floods, break-ins, and more.
This is where short-term rental insurance comes in, and it’s quite different from your standard home insurance coverage in Thunder Bay—even if you’re renting out a part of your residence. You can think of short-term rental insurance as specialized coverage for your rental and the income it generates.
As mentioned earlier, insuring your short-term rental is quite different from your home insurance coverage. Short-term rental insurance is a type of home insurance coverage that is designed to protect you when you rent out your property on a short-term basis.
“Short-term” is often defined differently by various insurance companies. However, the general timeframe is up to 6 months.
Short-term rental insurance is defined based on the occupancy of the property—who lives in it and how it’s used. In a standard home insurance policy, it’s expected that the property is owner-occupied on a permanent basis. But in a short-term rental, occupancy is constantly shifting.
Occupancy gets a bit complicated when you rent out a part of your home on a short-term basis, like if you are an Airbnb host, while the rest of the property is owner-occupied. This is where many homeowners struggle to determine if they need a different insurance policy to cover the short-term rental portion of their home—and the short answer is yes.
Without short-term rental insurance, claims from damages caused by guests may be denied under a standard home insurance policy. Worse, your home insurance policy may be canceled if you don’t inform your insurer of the change in occupancy.
Yes, some home-sharing apps like Airbnb do provide insurance coverage for hosts. But the bottom line is, it’s rarely enough to protect you and your home.
We’ve already established that your home insurance coverage will not cover losses occurring as part of your short-term rental. Built-in coverage for hosts on home-sharing platforms applies in case of physical damage caused to your home by guests. But it often stops there. Essentially, these platforms are only liable for losses directly related to renting out and not disasters that occur while you are hosting, like fires and weather damage.
In addition, this built-in coverage comes with specific policy limits. For one, the coverage amount is often capped at $1 million, which may not be enough depending on the extent of the damage and the cost to repair or rebuild, not to mention additional living expenses you may incur during this period.
Most crucially, the built-in coverage offered by home-sharing platforms often excludes liability or theft claims. This means you won’t be covered for losses claimed by guests during their stay—unless you have your own short-term rental insurance coverage that kicks in when the built-in one falls short.
As mentioned above, short-term rental insurance is a special type of home insurance coverage. It protects you from losses incurred when you host on Airbnb and other short-term rentals so that you can protect both your home and rental service.
Similar to a standard Thunder Bay home insurance policy, short-term rental insurance covers your home from a wide range of losses. These include the most common risks like fires and natural disasters, as well as property damage from burst pipes, break-ins, theft, and more. Depending on your coverage limit, you may also be able to access additional coverage for damage caused by guests in excess of Airbnb’s built-in coverage. This covers you against the widest possible range of losses.
Most importantly, your short-term rental insurance provides the liability coverage that a built-in policy doesn’t, or doesn’t adequately cover. This covers losses claimed by guests due to injuries and other damages they may have suffered during their stay.
Depending on your short-term rental insurance policy, it may also include coverage for lost rental income during the period that your property cannot be occupied. This means the income you would have earned while your property is undergoing repairs after damage from disasters such as fires can be covered.
But just a quick note: short-term rental insurance doesn’t cover your guests’ belongings and other personal property. While this may be stated on the booking platform, it’s important to review this with them so they’ll know to protect their property.
Ready to welcome guests to your Thunder Bay home? Be a five-star host, starting by protecting your property and making sure it’s safe, both for you and the many guests who will have the pleasure of staying with you.
At PAIB Insurance, our insurance brokers are here to help you protect your home and welcome guests safely with short-term rental insurance. We’ll help you get the right coverage for your home so that you can protect it from the risks associated with the comings and goings of guests and your rental income. Get the coverage you need to run a successful short-term rental, protect your property, and welcome guests safely.
Want to be a five-star host? Start with the right short-term rental insurance for your home. Contact PAIB Insurance in Thunder Bay to get started.
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