The Sharing Economy and Your Home

The Sharing Economy and Your Home

There is a burgeoning online economy growing out of peer-to-peer based sharing of goods and services. It is known as the sharing economy, and with its growing popularity comes concerns around regulation and consumer protection. Further to these concerns is the need to address gaps in insurance coverage, especially pertaining to the home-sharing model familiar to some rental networks like Airbnb, Flipkey and HomeAway.

Short-term rentals are different from long-term tenancy agreements in that the duration of stay is much shorter and the turnover of tenants is more frequent. These short-term stays are promoted through digital platforms where home-owners are able to easily list their unit and provide short-term accommodations.

More and more homeowners are turning to short-term rental of their property to supplement their income. With growing concerns over housing availability in big cities, it’s no wonder that homeowners are turning unused space into short-term rental units. However, what most home-sharers across Canada don’t know is that their insurance won’t cover the losses or damage that could occur. That’s why our partners at Aviva have rolled out a new home-sharing endorsement that addresses any gap in coverage related to home-sharing.

By removing the rental exclusion from their home insurance, hosts are able to carry out short term rentals of their residence. A typical homeowner’s policy will offer protection for your house, belongings, detached buildings on your property, personal liability and living expenses while your home is being repaired or rebuilt. By comparison, Aviva’s Home-sharing endorsement covers liability arising out of the short-term rental, loss or damage to buildings and personal property, intentional acts, criminal acts, or failure to act by a guest, loss or damage to a guest’s property up to $1,500 and fair rental value.

There are some automatic features through home-sharing platforms like Airbnb, such as guaranteed protection, however, according to Aviva, “it should not be considered a replacement for home insurance”[1]. Unlike Aviva’s Home-sharing insurance, Airbnb’s Host Protection Coverage does not cover intentional acts, loss of earnings, or liabilities[2].

This added coverage can be tailored to the customer’s rental activity needs by determining whether the entire home will be rented for 90 or 180 days, or if a portion of the home will be rented to multiple short-term guests year-round. The last condition, available to rental income property owners, pertains to short-term guests year-round in an income property.

So, if you’re thinking about opening up your space to temporary guests to supplement your income, be aware of the liabilities and protect yourself with PAIB Insurance Inc.