Airbnb Home Insurance in MA: Q&A on Renting Your Home
July 17, 2018
Updated Rules on Airbnb Rentals in Massachusetts: According to a compromise reached on December 28, 2018, all short-term rentals in Massachusetts must be registered and insured, but only hosts who offer rentals for more than 14 nights per year are required to pay the state’s hotel tax.
What Are the Requirements for Renting a House in Massachusetts?
As of December 2018, new regulations require homeowners to do the following:
- Register their property with the MA Department of Revenue;
- Collect a 5.7% state lodging tax, along with any applicable city, town, or regional (Cape Cod) taxes; and
- Maintain $1 million liability insurance to cover each short-term rental.
Again, although operators who rent for 14 days or less per year can apply for an exemption from the taxes, they are still required to register and insure their properties. To read the exact language of the rules, and to better understand your Airbnb hosting insurance requirements in MA, please refer to the official Act, Regulating & Insuring Short-Term Rentals (in particular, page 20).
If you’re thinking about renting your home through a platform like Airbnb, HomeAway, or VRBO, you’re probably wondering how this decision will impact your home insurance. Would you be covered, for example, if a guest broke her leg on your stairs? Or if a pipe burst and destroyed your travelers’ expensive luggage? What if the renters threw a wild party and trashed your house? It certainly wouldn’t be the first time…
Whether you’re renting out a beach cottage, a city condo, a downtown apartment, or a suburban spare room, get clarification on the following Airbnb home insurance questions:
- Which types of losses should be covered (property damage, bodily injury, theft, etc.)?
- How much protection do you need for different loss types (e.g. $50,000? $100,000? More?)?
- Which types of losses may still be excluded, even after purchasing home-sharing insurance coverage?
- Do you have to tell your insurance company that you’re hosting guests, even if you only rent your home occasionally? (Yes, by the way, you do.)
The following Q&As begin to answer some of the above, but please remember that every situation is unique. We recommend contacting our team (508.339.2951) for more thorough, personalized advice on Airbnb home insurance.
Does my current home insurance cover Airbnb hosting or other home-share listings?
In most cases, no. If you are accepting money in exchange for the use of your home, most insurance companies would consider you a landlord or a business proprietor. In either case, a personal home insurance policy probably wouldn’t apply to your situation. And if a claim ever arose from a paying guest, your carrier would probably deny it—and possibly cancel your policy.
Okay, then which type of insurance do I need to rent my home on Airbnb?
This depends on your carrier and the terms of your policy. It also depends on how often/how long you’re renting out the space. Finally, it may depend on the type of rental listing—”whole home” versus a shared-space/host-occupied situation.
Your insurance options may include:
A Home-Sharing Endorsement or Rider—This is added coverage that sits on top of your existing homeowner’s policy to cover *some* loss events related to home sharing. An endorsement may limit you to a certain number of rental days per year (e.g. 31 days). Be sure to discuss policy limits and deductibles with your agent. Also, beware that an endorsement may exclude some very common scenarios—like intentional guest damage to your property (versus accidental), or lost rental income (due to time needed for extensive repairs).
A Commercial Insurance Policy—This is a policy designed for a business, which means it includes both liability coverage and property coverage—whether the damage to property was intentional or not. Because this type of policy is designed specifically for innkeepers and B&B proprietors, hosts are not limited to a certain number of rental nights during the policy term. A commercial policy may also be easier to obtain if you are sharing walls and space with your guests. Naturally, this type of coverage is often more expensive.
But wait. Don’t I get Airbnb home insurance automatically, through Airbnb?
To a limited extent, yes. Airbnb offers some free coverage programs to its hosts. But these programs also come with some pretty significant gaps. It makes sense to review all conditions and exclusions with your local insurance agent. Airbnb itself recommends that hosts do their due diligence, saying:
The Host Guarantee is not an insurance program, and it should not be considered as a replacement for homeowners or renters insurance… We strongly encourage all hosts to review and understand the terms of their insurance policy and what it covers and does not cover. Not all insurance plans will cover damage or loss to property caused by a guest who books your listing.
With that disclaimer in mind, here’s a bit of detail on Airbnb’s “Host Guarantee” and “Host Protection Insurance.” Respectively, these programs cover 1.) damage to your property and 2.) damage to your guests’ property or guest injuries. Here’s a closer look:
Airbnb Home Insurance:
Airbnb’s Host Guarantee is designed to address damages to your possessions caused by a guest. The Guarantee program will reimburse you for qualifying damages up to $1 million, but it does not cover stolen cash, pet damage, or general wear-and-tear. It also doesn’t cover losses associated with cybercrime. Again, this program is not intended to be a substitute for home or renter’s insurance.
Airbnb Home Insurance:
Airbnb’s Host Protection Insurance is designed to protect hosts against claims of bodily injury or third-party property damage. HPI offers primary liability coverage of up to $1 million per occurrence, but it won’t cover claims caused by mold, bed bugs, or many other specific circumstances. You can read the detailed terms here.
What about home insurance for HomeAway or VRBO rental?
Like Airbnb, HomeAway offers up to $1 million in liability protection, which covers traveler injury claims and third-party property damage claims (e.g. your guests hit a baseball through the neighbors’ window). But it does not cover any damage to your property—a pretty significant shortcoming.
How does Airbnb home insurance apply to condos?
If you live in a condo community you should check the association bylaws and master insurance policy before advertising your space on any home-sharing site. Many associations prohibit short-term rentals altogether, at the penalty of hefty fines. Others may allow home-sharing, but only according to clearly outlined rules and/or on the condition of association approval, prior to tenancy.
Bottom line: don’t share your home until you’ve reviewed your insurance needs. One of our experienced, Massachusetts insurance agents would be happy to help you find ideal coverage, based on your hosting plans and goals: just call 508.339.2951.