Vacation home renting has become increasingly popular, allowing vacationers to experience a taste of home living away from home for a short while, usually 30 days or less. You may be the one renting a luxury home for your vacation or have rented out your luxury home in Chandler to vacationers.
While it is a great way for you to earn money off your own condos for sale for instance, it’s important for you to know how that affects your liability status. For instance, who is liable if the renter sustains injuries in your home? Who covers property loss or damage in the course of the rent period?
The specifics of insurance law may differ depending on the state you are in as you vacation, but here are some general ideas to keep in mind.
Liability for renter injury and property damage
Accidents happen everywhere; you can slip down the stairs of your own house and break your leg. You would probably look to your health insurance to cover your treatment costs. However, if the same thing happens to someone renting your condo or it happens to you as you rent your vacation condo someplace, what is next?
Can the renter file a suit against the landlord claiming that the fall was caused by negligence in maintaining the stairwell for instance? Yes, he or she can. Will the property’s managers pay for the lawsuit in any way? No, they will not. Virtually all managers issue a disclaimer that they will not be held liable for any such occurrences, leaving the owners to fend for themselves. If a a renter brings a lawsuit against an owner, it’s up to the owner to find defense representation and render damages if verdict is brought in favor of the complainant.
What if the renter damages the host’s property? Well, in this case, depending on the short-term hosting company managing the place, the owner may get limited coverage for property damage by renters. Still, having, liability insurance as a condo owner interested in short-term/vacation leasing is an absolute must.
Look at your insurance policy’s terms
Find out if your current policy offers protection for short-term rentals. There are two kinds of policies you can get, depending on the side of the equation you’re on:
Homeowners’ insurance offers protection against loss of and damage to your home and its contents, while liability insurance covers accidents on your property. This means that if a tenant has sustained injuries and brings a claim against you; the insurance policy should pay for defense and settle any damages as far as the limits of the policy. Without liability insurance, you will have to pay for these costs yourself.
Prior to renting out your vacation condo in Arizona, make sure you’ve carefully read your insurance policy, and make any adjustments you need to keep yourself shielded from lawsuits. Call the insurance company and find out if it specifically provides cover for short-term rentals. There are also policies providing coverage for letting out a room in the house you reside in.
Renters’ insurance offers cover for any destruction or theft of possessions while someone is living in your rental house, with liability cover for injuries to short-term tenants while in your rental house. This is important especially if you also live in a rental, since the landlord’s policy won’t cover you or your personal belongings, or liability.
However, renters insurance is not comprehensive enough to cover people who rent out part of their homes to paying tenants, rather just the occasional guest. You can discuss with your insurer to see how they can help you to protect yourself though.