Home Insurance – Take Care When Renting Out Residence
In recent years, a trend has gained substantially greater interest among travelers. In order to save costs and for other reasons, such as gaining a more authentic travel experience, it has become increasingly popular to temporarily rent out residential space. This may take the form of any of the following:
• Renting out an entire home for, typically, less than 30 days
• Renting out a subparts of a home for, typically, less than 30 days
• Renting out all or part of an apartment or condo for, typically, less than 30 days
• Renting out a part of a room or even a single item, such as a couch (for sleeping) for, typically, a week or less
This concept is a variation of the longtime tradition of house swapping where parties may arrange a mutual exchange of residential use while vacationing in each other’s respective locale. Such exchanges do not, usually, cause problems since the arrangement falls in line with the use of residences in their intended manner and as a part of an equal exchange.
The rise of a dominant player represents both the newer concept and some related, significant problems. Air Bed and Breakfast (AirBNB) is a rapidly growing company that arranges for total or partial rentals of residences to travelers. Essentially, for a fee, AirBNB allows use of its website to post information on residential space availability and rental costs. The site charges a percentage of each transaction amount to both the host and guest that conclude a transaction.
The problem is that providing residential space to others for income turns the events into business transactions. Such transactions may cause issues under several areas:
• The jurisdiction’s laws
• Residential Insurance Policy
• Property Owner Association (including Condo or Apartment) Rules
A person who is considering rental of his or her residence to others should take the time to make sure that it doesn’t create either legal or insurance problems. Some jurisdictions require a license as a bed and breakfast operator to let out space. Besides licensing fees, there are other, related rules and regulations for operating as a bed and breakfast. Violation of such laws can result in significant fines.
Property Associations create rules that are intended to address fairness and safety among its members as well as to preserve unit value. Temporary rentals may be considered a breach of rules that could result in financial penalties and/or eviction.
What about insurance? Rentals can result in accidental loss to property as well as injuries to others. Eligibility for protection against property loss or claims or lawsuits involving injuries to others may be voided if the incidents involved business activity.
If you are considering renting out your living space, take the time to make sure that you’re not creating either legal or insurance problems. If you want to rent out your home we do have insurance solutions for you so call us today!
Source: ©The Rough Notes Company, Inc.