I have recently finished my basement out with a full apartment. I have listed it on HomeAway and Airbnb. We have had great interest and have had 3 short term booking and 1 booking for 19 days within 1 week. This is much more than we ever thought would happen. My question is do I need a more extensive of insurance policy with people staying on our property. We have a small farm they are open to walk around and play ground for kids. I have a normal homeowners policy for my residence. Do I need more?
Homeowners policies are typically inadequate for Short Term Vacation Rentals such as HomeAway & Airbnb. In fact, if insurance carriers found out that you are renting, you may run the risk of getting dropped from your policy or having a claim denied - see the AirBNB forum below:
I am independent insurance agent serving Alabama and I'd be happy to help you navigate this process.
When I got my first Airbnb going I just put short term rental insurance through my regular home owners insurance. I personally don't trust these million dollar insurance coverage programs that the STR platforms are advertising but I have heard success stories about them.
@Jason Jebeles Man that is great! I appreciate your posting this, because we are also in Alabama and are preparing to finish out about 700 square feet in our basement. We have kicked around using it as a STR as well. I don't have an answer to your insurance question, but I am curious what answers others give and I would also like to know a little more about your space and your rates.
Is it just 1 bedroom?
Does it have a bathroom?
Kitchen or kitchenette?
What is your average nightly rate?
If you'd be willing to share, I'd appreciate your response. Feel free to pm if you'd like. Congrats man!
@Kris Reeves I think you will do very well in Trussville with this. Many of my bookings are coming from people needing to be in Birmingham and you are closer than I am. We live on a small farm and I built the basement out with rustic accents which make it kind of appealing (i think). I have the link to my listing below that will answer all of your questions.
@Jason Jebeles Nice work on the finishes! That full kitchen will probably help keep it rented. We are opting to go with just a sink, refrigerator and microwave, not a full kitchen. Just keeping with what you'd find in most hotel rooms. We are looking forward to our own little house hack! Good luck sir!
@Jason Jebeles congrats! I hope you have a lot of success with that! I own a few properties in Birmingham and my parents still live in the Oak Mountain area, so it's cool to see that area growing into the STR arena!
In case you haven't made a decision about you insurance, I would HIGHLY recommend getting coverage specifically for short term rentals. The policy that Airbnb has only covers damages, not liability, so you definitely want to make sure you have robust liability insurance just in case something happens to someone on your property!
First off, congratulations on taking a big step. Airbnb is awesome.
The short answer to your question is: Yes, you absolutely need an insurance product specifically catered to short-term rentals. There are companies out there specializing in this area. Proper Insurance is a good one. Slice is another interesting one. (Shameless plug: my wife @Erin Spradlin actually just wrote a BP blog post about the need for STR insurance.)
I am not an insurance agent -- insert obligatory disclaimer here -- but I can almost guarantee you that your normal homeowner's policy will not cover you, which makes sense. There is a certain risk insurance companies are covering you for living in your home, which is not the same level of risk as inviting guests into your home on a routine basis.
Like @Myka Artis and @Shelby Pracht said, I don't really trust the Airbnb coverage. One small correction, though. Airbnb has two products they say cover hosts: The Host Guarantee, which is $1 million of protection against damage to your property and the Host Protection, which is $1 million of insurance protecting you against liability. (Someone breaks a leg in your place and sues, etc.) Either way, Shelby's point is important: I've heard some people have okay experiences, but others have not. Their coverage areas are not as robust as, say, Proper Insurance's coverage areas. Anyway, do some of your own research, but the big takeaway is to not rely on your existing coverage. If you do, you'll likely pay in the end.
Again, congratulations and good luck!
@James Carlson thanks for the clarification about the Airbnb coverage. I'll have to look into that!