Airbnb and other things that give your insurance agent nightmares.

By Jessica Dellemann, CIC

Often, when we are doing reviews with our clients, we are finding (after some digging) that they are earning some extra income by renting out their house for Packer games, or by driving for hire through sites such as Uber or Lyft.  When we ask why they didn’t let us know about this sooner, the most common response is that they didn’t think it mattered.  We can certainly understand why people would think it doesn’t matter.  Many of the websites for renting out your home or driving for hire are somewhat confusing, or worse, they may give the impression that you “are automatically covered” for liability issues.  However, in many cases, there is absolutely no coverage and even when there may be some coverage, there might be huge loopholes that need to be carefully addressed.

Let’s look at renting out your home through a site such as Airbnb.  Seems pretty harmless. The renters are required to pay a security deposit.  You have homeowners insurance.  You should be all set, right? Wrong. Unfortunately, what many people don’t realize is that a lot of homeowners insurance policies have specific exclusions regarding renting out your home (or an area of your home), especially on a short-term basis.  The security deposit required by the website might be sufficient to cover minor damage or theft.  But…since many home insurance policies do not cover claims arising out of renting out your property, if your “renter” broke their neck falling down the stairs or burns your house down while drunken cooking after a huge Packer win, there could very likely be no coverage at all.  The bottom line is, make sure that your insurance agent clearly understands what you are doing and be sure to get the ok (preferably in writing) that you are covered!

With drive-for-hire car sites, such as Uber or Lyft, it gets even more confusing because those companies tend to provide SOME insurance for their drivers.  However, commonly, the coverage they provide only kicks in when there is a passenger in your vehicle.  Many personal auto policies exclude ANY sort of “commercial use” of your vehicles.  Driving for money would be considered a commercial use.  Therefore, there is a definite gap in coverage when you are logged in to the app ready to take a driver, or while you are on your way to pick up the driver.  During that time period, you would typically not have coverage under your personal auto policy.  Some insurance companies are providing endorsements that can be added to a personal auto policy to cover this gap.  Other insurance companies are saying they want nothing to do with this type of exposure and will not write policies for drive-for-hire drivers.  Again, the bottom line is to make sure your insurance agent clearly understands what you are doing and get the ok (preferably in writing) that you are covered!