As the sharing economy flourishes, you may be tempted to rent out your home through a service such as Airbnb as a way to generate extra income. But don't expect anyone to help share the costs if you need to file a homeowners insurance claim and you don't have the proper coverage in place. "It's important to discuss your particular circumstances with your insurance agent before you ever engage in an Airbnb-type arrangement with your property," says Chris Hackett, director of personal lines policy for the Property Casualty Insurers Association of America. With Airbnb and similar services, individuals use the companies' websites to list everything from spare bedrooms in their own residences to opulent castles they own as rentals for travelers from around the globe. Airbnb was launched in 2008, and it now boasts more than 800,000 rental listings in 190 countries. While it may seem like a nice way to share your extra space and earn extra bucks in the process, things can quickly get tricky if you intend to rent out all or part of your home. "It's important that property owners and tenants consider the risks and the benefits and the pros and the cons," Hackett says.
The Fine-Print Fest
If you don't have the right homeowners insurance coverage lined up, you could run into major financial issues if something goes wrong and you need to file an insurance claim. "Depending on the circumstances and type of claim, you may be responsible to pay money out of pocket. Not having adequate coverage could put you at financial risk," Allstate product operations manager Christy Hradek and landlord package product line manager Katie Boyle said in a written statement. Listing your home on a site like Airbnb also could run you afoul of local regulations. In a number of communities, these arrangements have come under criticism for violating residential zoning regulations and failing to collect hotel taxes.