Home-Sharing Risks in the Age of Airbnb
The meteoric rise of Airbnb is the most obvious sign of the growth in U.S. home-sharing. According to Pew Research, 11% of all U.S. adults have used home-sharing services and it’s estimated that there are now over half a million Airbnb listings nationwide.
Clearly, home-sharing is a trend for property casualty insurers to watch. Renting out a single room or an entire home, typically for a short period, carries with it diverse potential exposures. Risks include damage to the premises or personal property in the premises, theft of the homeowner’s personal property and bodily injury to guests while staying in the home.
A few insurance carriers have already started to offer endorsements to add coverage for home-sharing activities and more are expected to follow as demand grows.
One endorsement being offered in a handful of states provides limited coverage for personal property up to $10,000 per rental period. Another endorsement includes protection for rental of other structures, increased protection for personal property and coverage for theft of personal property from the part of a residence rented to others.
Meanwhile, ISO has developed endorsements for use with their homeowner’s policies to address new exposures that are expected to become effective March 1, 2017. The endorsements can be divided into four different types:
1. Endorsements that exclude home-sharing but preserve the traditional homeowner’s coverage
2. Endorsements that include coverage for home-sharing host (homeowner’s) activities
3. An endorsement that increases the limits for damage to property of others
4. Other endorsements that need to be revised as a result of the introduction of the endorsements discussed in numbers 1) and 2) above
The endorsements introduce new definitions, including home-sharing host activities, home-sharing network platform, and home-sharing occupant. The current definition of “business” has also been revised to incorporate home-sharing.
The endorsements which preserve the traditional homeowner’s coverages are mandatory and specifically exclude home-sharing activities. ISO has also drafted home-sharing broadening endorsements for each of its homeowner’s policies, with the intention of providing coverage for hosts of home-sharing participants. The endorsements provide property coverage for other structures and landlord furnishings, as well as property coverage for losses as a result of theft.
The broadening endorsement also addresses liability and provides, for example, coverage for personal injury arising out of home-sharing host activities and the rental of an insured location for home-sharing host activities.
It’s predicted that home-sharing use is going to quadruple in the next few years, with clear implications for insurers and insureds. If you have any questions about restricting or broadening your homeowner’s coverage, or if you would like to discuss personal umbrella coverage for which there are no similar ISO Endorsements available, please don’t hesitate to contact us.