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Sharing an Abode? Here’s How It Affects Your Home Insurance

Home Airbnb

If you think sharing your house with a stream of visitors does not affect your home insurance policy, think again.

We may live in the age of the sharing economy, but if you are or plan on renting out your home or a room in it through online platforms such as Airbnb, FlipKey, or HomeAway, know you are solely taking on all the risks that entails if you don’t have home-sharing insurance as part of your existing property policy.

Home insurance protects your house and your possessions against unforeseen circumstances such as fire, water damage, and theft. All policies have conditions and exclusions such as running a business out of your home and not declaring it (renting out your home is a business, after all), which will likely result in a nasty surprise should you need to submit a claim. Therefore, it’s important to review your existing policy and talk to your insurer before listing your home as available for rent.

You need to ensure you have the protection you need first and foremost. For instance, imagine if one of your guests neglects to turn off a stovetop heating element that triggers a fire and destroys your kitchen. Think of what the financial impact would be to you if you do not have the right insurance policy.

Home Sharing Is Booming in Canada

In a relatively short time, the home-sharing concept has become remarkably popular in Canada.

According to 2017 data from the Hotel Association of Canada, 17% of Airbnb’s total revenue in the country is generated through what it calls “true home sharing” (when the owner is present during the guest’s stay). The lion’s share of Airbnb’s Canadian revenue (83%) is the result of owners renting their entire home. In other words, the owner is not present on the property during the guest’s stay.

Moreover, a 2019 report from Statistics Canada says the short-term accommodation market in Canada is growing tremendously and is worth approximately $2.8 billion annually with the largest markets in Ontario, B.C., and Quebec.

Renting Out Your Living Space May Be Risky

When you rent a room in your home or your entire home, you are obliged to inform your insurance company.

Additionally, most home insurance policies do not account for homeowners allowing other people to stay in their home without them being present. To put it simply, by renting out your abode and leaving the property, you are changing the risk profile on which your policy is written. That means your insurance company may void your policy or not honour a claim should you file one because of an accident.

There are other risks involved with participating in the home-sharing business that your home insurance may not cover, including:

  • If a guest intentionally damages your home
  • If belongings in your home vanish after a guest leaves
  • If your guests’ belongings are damaged while on your property
  • If your guests are injured or cause damage to your neighbour’s property

Do You and Your Home Have the Protection You Need?

There’s nothing wrong with participating in the home-sharing business, but not informing your insurer about it is not the right way to go. Start by talking to your insurer about your existing policy to find out what your options are, and take a few minutes to compare your home insurance rate.