The rise in popularity of homestay companies like Airbnb and VBRO has made the vacation rental by owner an attractive option for many Okanagan residents looking to earn some extra income during the busy summer season. There are currently more than nearly 300 active rentals in Kamloops and 450 in Kelowna.
“Before you decide to offer up your basement suite, however, be aware that not being properly insured could leave you liable and potentially wipe out your savings if a claim is made,” says Robbie Hoyte, a Senior Commercial Insurance Advisor with Valley First Insurance, a division of First West Insurance Services Ltd.
While Airbnb does have consumer protection as part of its user agreement, called the Host Protection Insurance Policy, there are coverage gaps for shared areas and exclusions for libel/slander, invasion of privacy, misappropriation of adverting ideas and any damage that occurs outside the time of the rental agreement (a few hours after the time the contract expires, for example).
“The only way to ensure you are protected is to talk to your home insurance provider,” says Hoyte. “If you live in your home and are renting a room short term, you can negotiate with your insurance company to offer coverage as an addition to your existing home policy.”
Something else to keep in mind is replacement costs. The insurance payout from a claim might only cover the cash value, rather than the replacement cost, of damaged property. “That’s bad news if replacing your property or fixing your home costs considerably more than it’s worth at the moment,” says Hoyte.
In addition, a regular homeowner’s policy generally won’t cover anything beyond the very first time the policyholder rents out or shares their home – after that, most brokers treat it as a commercial enterprise once you start making money from it.
“A separate commercial insurance policy may well be worth the cost of the premiums, if the income derived from the rental suite is significant/warrants it and it will include advertisement injury coverage, which covers libel/slander, invasion of privacy, misappropriation of adverting ideas.”
At the very least, it’s always imperative to let your insurance carrier know about any rental activity in your property whether it’s a long-term tenant in your basement suite, renting a room to a student, or renting space short term with Airbnb. Even though liability arising during an Airbnb stay should be covered by Airbnb’s coverage, are you willing to risk your financial security on it?
Robbie Hoyte is a Senior Commercial Insurance Advisor serving the North Okanagan at Valley First Credit Union,
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