Jim Breeze | Learn Airbnb
So you know you need Airbnb insurance, but you still have questions. Below are the most frequently asked questions about Airbnb liability insurance.
- Why does my homeowner’s policy not cover my short-term rental?
All homeowner’s policies carry a “business activity exclusion”.In other words, any claim involving a “business activity” could rightfully be denied. Airbnb is considered a business, so your claims will most likely be denied.
- Is my short-term rental really a business?
More and more cities like Austin, Santa Barbara, and Chicago are now requiring short-term rental owners to carry and pay for a business license. The tax codes have changed and short-term rental owners are now required to file a business Schedule C on their income taxes. Neither of these are requirements for a long-term lease rental. NEW NOTE: San Francisco just passed a law to go in effect Feb. 2015 that all short-term rental owners (30 days or less) will be required by law to pay the cities 14% hotel tax, carry $500,000 in liability insurance, and register with the city.
- I have a landlord policy and have been told this covers my short-term rental, is this correct?
Landlord policies also carry a “business activity” exclusion.Landlord policies are written for landlords, not business owners. A long-term lease rental is not a business. Let’s use a liability example: A renter leases your home for six months. Two months later he/she “slips and falls” in the shower because there is soap scum built up on the tub floor. Does this liability fall on the landlord? No, of course not, it’s the tenant’s responsibility to keep a clean tub. Now, the same situation. A vacationer rents a home for a week. You better believe it’s the property owner’s responsibility to keep a clean tub. The vacationer assumed they were renting a clean/safe property. No different than a hotel. The liability falls on the property/business owner.
- How do I get covered for business activity?
You buy a business insurance policy.
- If I insure my short-term rental as a business, can I also stay or live there?
There are no standard occupancy restrictions on a business policy. This means the property is insured while you stay there, friends or family, and of course paying guests.
- If I have a business policy do I keep my homeowner’s or landlord policy in place?
The business policy is designed to fully replace the current coverage you have. You would cancel your current policy.
- What is personal liability?
Personal liability is found on homeowner’s policies.It covers you for personal negligence and follows you anywhere you go in the world. It’s very important to carry personal liability. This is why the business policy needs to add it in the event your short-term rental doubles as your primary residence. There is no reason to add it in the event you carry a homeowner’s on another residence, as you would be “double insured”.
- Does my personal umbrella policy cover over my short-term rental?
The same “business activity” exclusions apply as it’s personal. However, standard personal umbrellas do cover over a long-term landlord property. It’s not a business.
- What is a commercial umbrella?
A commercial umbrella is a policy that covers “above and beyond” a standard business policies liability limits.Most business policies carry $1,000,000/$2,000,000 in commercial general liability, and would suffice as the underlying policy for a commercial umbrella.
- I have my short-term rental under a Corp is this OK?
In fact, this is encouraged. Since your short-term rental is a business it’s always smart to incorporate. A standard business policy can have the named insured as an individual, partnership, LLC, Corp, or Trust.