Renting Your Digs Out on Airbnb: Too Risky If You're Not Insured

Don’t rent out your house, condo or apartment through Airbnb or a similar service without making sure both you and your guests are insured. You’d be foolish to let someone enter your property without obtaining proof that they’re insured.

If neither you nor they are insured, you may incur substantial out-of-pocket costs, either directly or to hire a lawyer. Despite your efforts to screen out bad apples, your temporary tenant or their guest could vandalize, steal, or damage your or your neighbor’s property. A guest who gets hurt on your property could sue you, claiming you were negligent, even if you weren’t.

Most homeowners have home insurance, so they have some protection. But most renters do not. They should, especially if they’re renting out a room via Airbnb. Renter’s insurance is inexpensive and can be invaluable.

Require your guests to provide a certificate of insurance. This document, easily obtainable from their insurance provider, proves that the guest has home, condo or renter’s insurance. It gives the name of the insurance company and policy number.

While your own insurer would cover you, it’s far better to have the guest’s insurer pay the claim. With property damage, your own carrier will subtract the deductible from your claim check. But the guest’s policy would pay under personal liability coverage, which has no deductible. You’d be fully reimbursed.

It’s usually simplest to file the claim with your carrier and have it subrogate against the guest’s carrier. Your insurer will fight to recoup its money and your deductible.

Without insurance your only recourse would be to take the individual to small claims court.

What if your guest can’t or won’t provide a certificate of insurance? Don’t rent it to them.

Generally, you don’t need to notify your insurer if you’re renting out your house or apartment, provided you live there. But if you don’t live there anymore and rent it, you must notify your insurance broker or carrier and get a commercial policy.

Mark Carrasquillo is an insurance broker with E.G. Bowman Company, an independent insurance agency in Manhattan. Founded in 1953, E.G. Bowman offers all types of commercial and personal insurance. Mark can be reached at mcarrasquillo@egbowman.com. Twitter: @egbowmanco