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Air BnB Insurance: How To Get it Right - YouTube
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Are you thinking about renting
maybe a room in your house
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or an entire house that
you own out on Airbnb?
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This video is absolutely for you.
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We're gonna dig right into
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how insurance works for
Airbnb rentals right now.
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Hey, my name's Jeremy Goodrich.
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I'm the owner of Shine Insurance Agency
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and your host for the Shine
Insurance YouTube channel.
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On this channel, we
talk about three things.
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Buying new homes, insurance,
and owning a business.
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It's the three things that
we talk to our clients about
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and answer questions every day about.
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And so we thought we would
share some of our answers
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with you as well.
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Alright, let's dig into Airbnb insurance.
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So your first question might be
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does my homeowners insurance policy
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or even if you have a
completely separate house
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that you don't live in, my
tenant insurance policy,
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cover Airbnbs properly?
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And the answer, as you may have
guessed, is absolutely not.
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The answer is no because
insurance companies
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really separate out different things.
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When it comes to your home,
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they really see that as
a personal use space.
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You use that for yourself, right?
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So as soon as you rent
out a room in your home
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or the outbuilding behind
your home on Airbnb,
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you're inviting essentially strangers in
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and you're making money off of that.
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So that's like a business exposure.
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You're actually making money.
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And your homeowners insurance policy,
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your personal insurance policy
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is simply not going to cover
if one of those people is hurt
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and they file a lawsuit
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or they have injuries
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or if one of those people lights a candle
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and burns down your house.
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So, if you are renting
out your home right now
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or any space on your home,
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and you do not have proper insurance,
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you're not covered for anything
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that would happen in that scenario.
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So you definitely need to listen
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through the rest of this video
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and figure out how to
get covered properly.
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If you own a second house
that you don't live in
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and you're renting that
out through Airbnb,
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you can still have insurance problems.
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If you have a normal tenant policy
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that's created for having
like an annual tenant,
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someone you sign up for a year usually
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and you say, hey, you're
gonna live here for a year,
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this is gonna be the monthly rent,
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and everything is set
up hunky-dory, right?
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That's perfectly fine for an annual rental
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but Airbnb is a vacation rental.
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Different people are coming
in at different times.
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Maybe someone comes for one night.
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maybe someone comes for three nights.
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In any given week you could have three
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or four different people
staying in that house.
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And any given month you could have
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lots of people staying in that house.
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It's a completely
different kind of exposure
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than having an annual tenant.
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And so insurance companies want
to set that up differently.
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So if you have a tenant insurance policy
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that's set up for annual tenants
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and you're renting it out as
a vacation rental on Airbnb,
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the coverage is not set up properly
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and you're gonna be very
disappointed in a claim situation.
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So your homeowners policy
doesn't properly cover.
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A tenant policy doesn't properly.
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So let's talk about what
does properly cover.
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Simply put, we need a vacation
rental insurance policy.
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That's kind of the lingo for exactly
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the kind of things we're working on.
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Historically, vacation rentals
were kinda like a cabin
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you went to in the mountains.
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You called some local,
realty place that told you,
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hey, there's some options.
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Maybe there's a five bedroom,
a ten bedroom, whatever.
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You pick from them, you drove
up, you picked up the keys,
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you went up to the place,
you stayed for a few days
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with your family and friends or whatever
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and it all worked out fine.
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That's the traditional
model of vacation rentals.
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Obviously now, we have a
completely different model
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along with that older model.
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If you wanna go online and go to Airbnb,
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you can look at all the different options
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in the place you wanna go on vacation
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and set up your rental,
your vacation rental,
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right there on Airbnb.
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You figure it all out through Airbnb,
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it works great, we use it
all the time, I love Airbnb,
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but it's a different process
that you're working through.
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So the first thing that you need
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to do with your rental insurance
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is make sure you have
vacation rental clearly stated
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on your insurance policy.
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If you're talking with
a local insurance agent,
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they should probably have
multiple options for you
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that deal with vacation rentals.
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In fact, some vacation rentals
are specific for Airbnb
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and here's why.
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Insurance policies are
based off lease agreements,
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especially when there's
someone coming into a space
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and you're making money off of it, right?
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If you have a tenant
that's an annual tenant,
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you have a lease with them.
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If you have a vacation rental,
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you also have a lease agreement with them.
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It's a little tiny one,
just for a night or two,
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but there's still an agreement.
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Some insurance companies
love working with Airbnb
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because they know the agreement is made
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between the person who's
coming to stay in your house
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and Airbnb.
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Essentially, you sign that lease agreement
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when you sign up on
Airbnb to stay in a house
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for a short period of time.
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So insurance companies know
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that there's going to be
a clear lease agreement
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that's been written by Airbnb
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and if any claim happens,
if anything bad happens,
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that lease agreement will come into play
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and the claim will go smoothly
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because there's a clear lease agreement.
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If you're renting your vacation
rental out on your own,
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on your own website,
or in different places,
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you may not have a proper
lease set up on that site.
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You may have set it up perfectly.
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But insurance companies say
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oh, well, they may not have
the proper lease set up
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and so they're a little bit leery
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about providing insurance to someone
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who's not renting through Airbnb.
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So there's actually
policies that are out there
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that are specifically for Airbnb.
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They say you have to be
working through Airbnb
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if we're gonna provide insurance for you.
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So that's something you should check in
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with your insurance
agent while you're trying
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to get a policy in place for your Airbnb.
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Hey, is this specific to Airbnb
or can I use other sites?
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Can I rent it offline?
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Do different ways,
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different insurance policies
deal that in different ways?
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You wanna make sure you understand that.
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When it comes to the coverage
on the insurance policy,
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it's very similar to any
other kind of insurance policy
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you would wanna put on your house.
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There's a few things.
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The first is coverage for
the property itself, right?
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If you have a structure,
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hair hanging there,
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if you have a structure
or something like that,
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that you want to insure,
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certainly if it were to burn down
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or get hit by a tornado
or something like that,
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you would want the insurance
company to pay to rebuild it.
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And so you wanna have proper
coverage on your house,
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proper replacement cost for replacing
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that house if you need to,
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and all those kinds of things.
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Your insurance agent's gonna help you
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with the quality of your policy there.
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But obviously you wanna make sure
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that the structure itself is covered.
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You also wanna make sure
that your belongings
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inside your Airbnb are covered.
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Most annual rentals, you don't
have any belongings inside
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because the tenant brings their stuff.
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They bring their couch and
their bed and their clothes
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and their dining room
table and all that, right?
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But in an Airbnb, it's all your belongings
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that are inside of that property.
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And so you want to make
sure your insurance policy
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has contents coverage
enough to replace everything
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if you needed to do so.
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So covering the structure itself,
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covering the contents
inside, super important.
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And then finally, the liability coverage.
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This is if something bad
happens to someone else
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because of you or your property
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and if you're inviting
people in to spend one night
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or two nights, really
short periods of time,
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they don't know you as well
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and they can be more
likely to be litigious
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or file a lawsuit or whatever
if something bad happens.
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So you want to make sure you
have proper liability coverage.
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I would suggest at least $500,000
on your insurance policy.
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You wanna make sure that
if something bad happens,
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if someone slips on the
stairs and falls down them,
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or gets hurt in some other way,
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that you have coverage
on your insurance policy
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to handle that situation
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whether it's just the medical payments,
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the cost of the bad thing
that happened to them,
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or whether they file a lawsuit
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and you have to get into
that kinda scenario.
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Both of those are no good.
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You definitely wanna have coverage
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and you can do that by having
proper liability coverage
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on your policy.
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OK, so let's review.
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First off, your homeowners
insurance policy
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or your tenant insurance policy
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is not going to cover
the way you want it to
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if you're renting on Airbnb.
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Why is that?
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Because it's called
vacation rental insurance.
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And you wanna make sure
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that you have vacation rental coverage.
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If you're renting out
just a room in your house,
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you can add that to
your homeowners policy.
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Obviously, still wanna
keep the homeowners portion
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'cause you live there as well.
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But you wanna make sure
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that there's vacation rental insurance
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added to the policy as well.
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If it's a completely different home
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that you're renting
out for vacation rental
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you do not wanna use a
tenant occupied policy.
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Those are for annual tenants
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and they're a completely different thing.
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You wanna make sure the policy
is a vacation rental policy.
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Some insurance companies
want you to be on Airbnb.
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They expect you to be on Airbnb
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and that's because the lease
agreement is so important.
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They know Airbnb has a
clear lease agreement
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that a claim would go well in a scenario
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and that's why they want
you to be on Airbnb.
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OK, so where to get this insurance?
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Well, a local independent insurance agent
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is often the best way to go.
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They may have multiple options
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and can show you the different
options that are available.
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If not, you can certainly look
online for Airbnb insurance
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and see what options are out there.
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When you get a proposal,
please come back to this video
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and make sure that you
have the right coverage
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for the structure itself.
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That you have the right contents covered
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for the stuff inside of the property
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so that if it's damaged, it gets replaced.
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And finally, most importantly,
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that you have the right liability coverage
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for bad things that happen to other people
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because of your house
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and you're having all
these different people
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come in and out.
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There's a high likelihood that
something bad could happen
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and so you wanna make sure
you're properly covered for that.
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I would suggest $500,000 at least
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as your liability coverage on
your rental insurance policy.
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If you have additional questions,
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please put them in the comments below.
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I'd love to answer them,
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maybe even make a new video about it
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if there's some specific topic
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that you really need to know about.
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If you want more
information about insurance,
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you can check us out at shineinsurance.com
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or look through our playlists
in this YouTube channel.
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Until the next time, I'm
Jeremy, have a wonderful day.
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