Home Sharing: Insuring Your Home or Apartment

By the Mercury Team

Going on vacation used to mean searching for a hotel, and when arriving, enjoying all of the amenities the location has to offer. The days for a traditional stay at a hotel have officially changed with home sharing by Airbnb or VRBO. These two providers have popularized another form of lodging that’s become a must-consider on any vacationer’s list of to-dos. Home sharing—setting up your home or a room in your home for rent via a vacation rental platform—isn’t an entirely new concept, but it has gained momentum for homeowners and even apartment tenants looking to make additional income by renting out their spaces.

Below are some important things to keep in mind before you set your sights on potential riches by renting out part or all of your home on a vacation rental website.

Check with local ordinances for your city and state to ensure if short-term rentals are permitted.

Understanding the city and state ordinances that govern short-term rentals will help you establish your vacation rental under the proper regulations. Cities such as Los Angeles enforce specific regulations for home sharing, and all hosts must understand and abide by the regulations to avoid possible fines and citations.

Ensure you have proper vacation rental insurance.

Your standard homeowners insurance or renters insurance policy likely doesn’t provide coverage for hosting your home or apartment as a vacation rental.

“Standard homeowners insurance coverage is intended to protect you, your home and your belongings in the event of damage or theft,” said Bonnie Lee, vice president of property claims at Mercury Insurance. “Deciding to rent out all or part of your home through a platform like AirBnB or VRBO is a business venture, and your protection has to evolve to meet this change. Ensuring you, your home, your belongings and your new guests are protected requires a new level of insurance coverage.”

It’s crucial to have the necessary coverage—vacation rental insurance—to protect your home and belongings if you intend to list your property as a vacation rental. Renting your home or apartment also includes risks that aren’t associated with personal use property or liability coverage.

Coverage provided through the vacation rental platform isn’t comprehensive.

Vacation rental platforms, such as Airbnb and VRBO, offer coverage programs that can help cover the cost of damage caused by guests staying in your home. The Host Protection Insurance offered through Airbnb also provides liability coverage should the guest or a third party get injured or have their belongings damaged due to an incident at your home.

However, this coverage isn’t recommended as a replacement for homeowners insurance or other vacation rental-specific insurance. These additional coverage programs often have limitations to what would be covered. You should always read through home sharing insurance policies to fully understand what coverage the platform may or may not provide. 

Discussing policy options with your insurance agent can help you navigate your own insurance policy as well as the programs offered through the vacation rental platforms. Having the proper coverage prior to listing your home or apartment as a vacation rental can help you avoid expensive damages and fees or a possible eviction.