Does Your Homeowner's Insurance Cover Airbnb Hosting?
Many people are engaging in the so-called "sharing" economy (aka "collaborative consumption") to make a little extra money – or even a full-time career.
- Uber lets people work as informal cab drivers, although the service is under attack and has been banned or sued in some places, such as Portland, Oregon.
- RelayRides lets car owners compete with Hertz and Avis by lending out their vehicles when they're not using them.
- DogVacay arranges home-based pet-sitting services.
- Spinlister (formerly Liquid) offers peer-to-peer bike, surfboard, snowboard, and ski equipment sharing.
- LendingClub arranges private loans.
- Fon lets people share their home WiFi, and then use other home networks for free when they travel.
- Airbnb lets people rent out all or part of a house, apartment, RV, or yurt on a short-term basis.
Most "sharing" sites provide members with some sort of insurance, to protect against the risk of a guest flooding a bathroom or a borrower disappearing with a car.
The companies also generally provide some insurance protection to service providers, in case they're sued by a customer who's injured in the course of using the service. However, this "insurance" may be more limited than some providers realize.
The New York Times noted that uberX originally told drivers to submit insurance claims arising from accidents first to their own personal insurance carriers. Only if the claim was denied did the company's back-up insurance go into effect.
Since personal vehicle insurance policies almost always deny coverage for a driver providing rides for money, this could cause a private insurer to cancel a driver's coverage.
Uber changed this policy in July, and now provides primary coverage to drivers both when they have passengers on board and when they're on the way to pick them up.
However, Uber continues to provide only backup coverage when drivers are looking for passengers.
On New Year's Eve, 2013, a six-year old girl was killed in a crosswalk by an Uber driver who was neither carrying passengers nor on his way to pick someone up. The girl's mother said that she saw the driver staring at a glowing screen, and it's been suggested that he may have been looking for a passenger.
Distracted driving (drivers looking at a phone screen for fares) has been cited as one of the major public safety risks associated with Uber and other ride-sharing services.
Uber denied responsibility for the San Francisco accident.
Just as vehicle insurance companies generally deny coverage for paid driving, homeowner's insurance policies often deny coverage for home-based businesses – including being an Airbnb host.
Some insurance companies allow a home rental for only a few weeks per year. Some companies, such as CBIZ, provide special insurance policies for people who regularly rent out their own places.
Airbnb has a $1 million "Host Protection Insurance" program that protects hosts (and potentially their landlords) if a guest is accidentally hurt anywhere on the premises. The policy also covers some property damage claims.
However, as with Uber's policy, this coverage is secondary, unless the host doesn't have other insurance.
In some places, like San Francisco, an Airbnb host is required by law to carry at least $500,000 in liability insurance.
Are You Covered?
If you aren't sure whether your insurance covers your "sharing" business, it's a good idea to check and to consider getting supplemental insurance.
If you've been sued, or if you've been injured, you should contact your insurance company and/or a personal injury attorney.