Property Rentals & Insurance – What You Should Know
There’s a big trend going on in technology and society today where new, upstart companies are challenging the established ways of doing things. It’s given rise to what some people are calling a “sharing economy,” where people are using tech platforms to link up with other civilians providing a service. By now, you’ve probably heard of the most famous of these companies, the ride platform Uber. Another one of these disruptive startups – functioning something like an Uber for property rentals – is called Airbnb.
The quickly growing service is a platform for people to rent out their spaces or find places to stay in vacation spots. It’s not alone in this sort of online space: the internet has made it so easy to connect renters with each other, whether that’s on classified sites such as Craigslist, or just finding a place off the beaten path through some Google searching, there’s really a world of possibilities out there.
Do tread carefully when looking into any of these sorts of new ‘sharing platforms’ though – some of them raise a whole new bunch of regulatory issues that haven’t quite been addressed in a satisfying manner. In Airbnb’s case, what’s somewhat concerning for many people throughout the insurance industry is the safety, cleanliness and insurance implications of renting out your home to, essentially, a stranger.
(As an example of something that might make you nervous, there was a recent story in the news of a Calgary family who came home to find that their weekend renters had used a fake credit card… and done unspeakable things to their home.)
Insurance Considerations of Renting Out Your Place
From an insurance and homeowner perspective, you should, at the very least, take the following steps before you even consider the idea of renting out your home, whether it’s online, through the newspaper, or some other type of booking service.
- Re-familiarize yourself with your home insurance policy and exactly what it entails.
- If you’re a renter — in an apartment or a condo — or you’re part of a homeowners association, check your lease/deed documentation. You may be strictly forbidden from renting out your unit at all, even for a weekend. You don’t want to end up evicted for failing to abide by the terms of your agreement.
- Speak to your broker about your policy and whether additional insurance is needed.
- Just as Uber currently operates in somewhat of a gray area in many municipalities, Airbnb finds itself in a similar situation (here’s a story about the city of Saskatoon, for example, considering regulations ). So do check on whether there are any restrictions in your local municipality on these types of short-term rentals.
One of the potential advantages of specialized platforms such as Airbnb is that they at least have some verification features built in, designed to weed out unsavory characters and scammers. This company also offers a $1,000,000 “Host Guarantee.” However, you should certainly still speak to your insurance broker before you consider renting out your place. There are, naturally, a good deal of exclusions and legalese to get through, so you may even want to enlist assistance from a professional to understand your risks.
Checklist for renters
If you are renting out your place to an unknown person through another platform such as Craigslist, Kijiji, or even a local newspaper classified, here are a number of precautions that you may want to take before an agreement is made.
- Ask for references if possible;
- Get a security deposit/part of the rental money up front;
- Prepare a written rental agreement;
- Safeguard all of your valuables, regardless of how much you trust the renter;
- Be clear and upfront about the rules of your home (e.g. are pets allowed? Can they smoke outside if they want to? May they use the towels in the closet? Etc.) Put these in writing to avoid any misunderstanding about expectations.
And always abide by the old rule: if it seems too good to be true, it probably is. Trust your gut, and even if there’s some money to be made, if you’re not feeling confident then just don’t take the risk of granting someone else access to your home.
Considering renting out your home and need some guidance? Contact your local insurance broker today today to see how we can help.