Tom's Blog
If you are a vacation rental owner and think that your current N.C. homeowners or condo insurance policy has you covered, think again! Chances are your vacation rental activities are excluded under your standard N.C. homeowners insurance policy. Before you rent out your home/vacation home to renters, find out what you must know about insuring your VRBO or Airbnb rental.
Do Your Homework
If you rent your place out on Airbnb, you may want to do your homework regarding the wording on your homeowners/condo insurance policy to determine whether your insurance company allows vacation rentals under your policy. The wording may be coined as “business activity” and typically this is an exclusion. If you are unclear, it is recommended that you immediately contact your local N.C. independent insurance agent to discuss the terms and conditions of your current homeowners/condo insurance policy before you are hit with a claim where coverage may be denied.
Look Into Vacation Rental Insurance
Assume you rent out one of your bedrooms to an Airbnb guest and they fall while staying there, will you have coverage under your N.C. homeowners insurance policy or will it be denied? If you don’t have the right type of insurance protection, you could be faced with a hefty lawsuit and financial disaster.
If you are using your home for vacation rentals, you can’t depend on your homeowners insurance policy to provide the coverage you need; however you do have options. A commercial policy, or commercial “rider” to insure your property will provide coverage for business activities (rental activities) to cover the activity of renting to people/guests for 30 days or less.
Commercial Liability Vs. Personal Liability
If you rent out a spare bedroom on Airbnb and the guest falls and suffers injuries, the “personal liability” of your homeowners insurance only applies to bodily injury or property damage as a result of personal actions and NOT pertaining to business activities. Commercial liability and NOT personal liability would apply to situations of vacation rentals and provides the type of coverage needed to protect you should you rent your home/rooms out to guests.
Commercial Umbrella Policy Vs. Personal Umbrella
After speaking to your N.C. independent insurance agent regarding coverage for your vacation rental activities, you may want to further consider a business umbrella policy that will provide coverage above and beyond what is provided under the commercial liability insurance. Again, personal umbrella coverage only applies to personal negligence and excludes anything regarding business situations.
Truth Be Told
Honesty is the best policy here. If you aren’t explicitly outlining how you are utilizing your home to your N.C. independent agent, you can’t rest assured you will have the exact type of coverage you need to protect you. Having the proper insurance protection is fundamental when considering your home, your assets, and financial foundation and the only way to ensure this type of safeguarding is to discuss and disclose ALL of the facts surrounding your vacation rental activities.
The good news is that Paramount Insurance offers an exclusive program for insuring your Airbnb or VRBO vacation rental property through Berkshire Hathaway Homestate Companies. This provides broad coverage and is written on a commercial package policy. Call 336-869-3335 to learn more.
