The Real Risks of Renting Out Your Home Online

By InsuranceHotline.com Team
A tourist looking at his smartphone in the apartment that he's rented for his stay.

Signing up for sites like Airbnb sound like a great deal. You rent out a small space in your home and make a little extra money. But the reality of home-sharing is that many problems can arise. These issues aren't as simple as property damage -- you can find yourself in legal trouble when things go awry.

The good news is you can protect yourself with the right insurance product. That way, you can enjoy time away, and rent out your home to others with a minimum of worry.

Security Deposits May Be Inadequate

You may assume asking for a deposit provides you with adequate protection. But renting out to strangers means never really knowing who is in your home. They may host others, have a party, or just use your space recklessly without regard to your belongings. What you lose in damage can be much more than what you collected through a deposit.

Sometimes, even well-meaning renters can cause damage inadvertently. They may feel bad, but you're left with the bill and clean-up.

Home Insurance May Be Void

Insurers normally cover you for damage to your home. But if you're posting your residence on a home-sharing site, you may violate the terms of your policy. All of the protections in your insurance, from property damage to personal liability, might not be there. Your insurer may refuse your claim or cancel your policy entirely if you haven't previously discussed your home-sharing endeavours.

Some insurance companies now offer special home-sharing insurance. Your current provider may agree to place an add-on to your current policy. That's in addition to the insurance already included in your agreement with the home-sharing site. Keep in mind that the insurance from the home-sharing platform may give you some security, but may fall far short of what you need for full protection.

You May Break Other Home Contracts

It's not just home insurance that may be in jeopardy. A number of different agreements may be affected by home-sharing. Your mortgage or tenancy agreement -- if you don't own -- may have rules against subletting or renting out to third parties. This could get you kicked out of your home if you're a tenant, or incur penalties from your mortgage lender. Your condo corporation could levy fines for damage to communal areas, or even just for the very act of listing on a home-sharing site.

That's not to mention other potential repercussions from the city if you in a municipality that doesn't allow the practice. It's a good idea to know the rules, from local bylaws to collecting taxes.

Legal Liability for Injury

If someone gets hurt on your property, they can sue you. That's the case whether you're home or not. So if a renter, or that renter's guest, has an accident, you could end up facing legal liability. Normally, you would have some protection from your home insurance. But even if your home insurance isn't void because of the home-sharing, its limits might not be enough to take care of the lawsuit.

How to Protect Yourself

Despite the risks, home sharing can be a way to cover the cost of property ownership. Do your due diligence before you list.

  • Research local bylaws
  • Talk to your home insurance provider
  • Review any contracts involving your home
  • Get to know the home-sharing site's policies and protections
  • Purchase additional home insurance products
  • Check references or ratings of potential renters

In other words, know in advance what you're getting into, and take the right steps to get covered.

Finding the Right Insurance Coverage

Whether you're on the market for new insurance or want the latest quotes on a new home insurance policy, check out InsuranceHotline.com. You can get the best rates from innovative insurers.