With the current pandemic, many people are choosing to stay local and vacation within their own country. Due to this change, a lot of people are finding ways to make extra money by offering up their home as a short-term rental. You don't have to rent out the entire home. It can actually be a room or the basement. This is usually used to help supplement income, and it's an excellent way to make extra money without much trouble!
You want to make sure that you have proper coverage as your regular property policy may not cover some areas when your property is rented out.
What will be covered under a short-term rental policy:
1. Damage caused by tenants' vandalism
2. Loss or damage to a tenant's property
3. Fair rental value
4. Attempted theft or theft caused by tenants
5. Liability coverage for home, condo, and tenants
Damages caused by tenants
You are inviting guests into your home on a short-term rental basis. This coverage is important as you never know what's someone might just do. Should they vandalize your property in some way, you will definitely want it to be repaired.
One of the things to remember is that no one will love or care for a property as much as the owner. Just like most people drive a rental car differently than the vehicle they actually own. This is, usually, the same with your property. People just treat what they own with more care and concern. You need to protect your property with a proper short-term rental policy.
Fair rental value
The scenario is you normally rent out two rooms in your home for an average of $1,000 per month each, but due to a small kitchen fire from your last tenant, you're not able to rent out the property on a short-term basis for the next few months. However, because you are wise and you had purchased a short-term rental policy from your local insurance broker, you find that the insurance company will actually pay you the fair rental value of what you would have received had you been able to remain open. Insurance would be the least expensive way to be able to protect your business income.
Loss or damage to a tenant's property
When you take on a new tenant for your property, you as a landlord are now responsible for the safety and well-being of the invited guests, while they are on your property. This also includes your tenant's property, should they have to make a claim due to an insured peril such as fire, lightning, or explosion while a guest at your home. Your short-term rental policy attached to your homeowner policy should likely be able to cover that type of claim.
Liability coverage
Liability coverage is probably the most important as this is the one that can be the most financially devastating.
It's always important to get proper advice, especially when you are considering a new venture or something that you are not familiar with, such as short-term home rentals. Contact your local broker and learn about the pluses and minuses, so that you can make an informed decision!
- If you own a home, does the insurance policy require you to let them know that you decided to go into the short-term rental business, and does your policy have to be adjusted to accommodate this new coverage? What are the costs and what exactly is covered in the event of a claim?
- If you own a condo, have you checked with the board to make sure that you are not in violation of any board policies that you may not be aware of?
- If they do allow short-term, what is the minimum and the maximum? Is it 3 or 30 days, as some boards have made changes due to some people renting out the condo for the weekend and having wild parties for those few days.
- If you are renting your property as a tenant, will your lease consider this to be subletting, and would it be allowed?
In conclusion
These are some of the important things to be considered, should you decide to venture into the short-term rental environment.
With the way the world has changed drastically over the last few months, this will definitely be a popular form of vacationing, as many will still be reluctant to venture out of the country. This is the way that many people are supplementing their incomes when children are no longer living at home, or they are away from home for an extended period of time while attending college or university.
Contact a reputable broker such as Bethel Insurance Brokers, and our licensed representatives will be able to help you to make sure your property is well protected in the event of a claim.
Call us today and get your quote at 905-683-2323.