Property owners have a unique opportunity to efficiently rent out their entire home, a spare bedroom or other accommodation through the online service known as Airbnb. For travellers, Airbnb is a convenient, web-based platform that provides affordable and flexible alternatives to hotels. For property owners, the tool easily connects various rental units with prospective occupants and makes collecting payments simple and secure.

Despite its convenience and the potential for profit, Airbnb is not without its risks for those who decide to list. Before renting out your home or spare room through Airbnb, keep in mind the following tips:

1. Acquire the proper insurance.

Proper insurance is key to mitigating the risks associated with Airbnb. Take the time to review your renters or homeowners policy with ALIGNED Insurance Inc. to make sure you have adequate coverage in place.

2. Complete a home safety inspection.

Safety inspections can help Airbnb hosts address risks before they balloon into bigger issues. Before listing your property on Airbnb, complete a thorough home inspection and address all of the safety hazards you identify.

3. Screen all guests.

Prior to allowing guests to stay in your home, it’s a good idea to check their background. To begin, ensure that prospective guests are verified through Airbnb. You can also review any connected social media accounts and read guest references through the site. Above all, trust your instincts.

4. Set clear rules.

Through Airbnb, you can create guidelines for guests by completing the House Rules, Home Safety Card and House Manual sections of your profile. This allows you to set clear rules for guests around etiquette and safety.

5. Establish occupancy limits.

Limiting the number of occupants that can use your property will help ensure that guests are comfortable and safe during their stay. Occupancy limits should take into account the size of the property and local regulations.

6. Add a security deposit.

Adding a security deposit to your Airbnb listings can lessen the financial blow in the event of damaged property or another incident.

7. Secure your valuables.

When you open your home to guests, there’s the potential that valuables could be damaged or stolen. To protect expensive items, consider moving them into a safety deposit box or to a secure off-site location.

8. Protect sensitive information.

Your property isn’t the only thing you need to worry about when inviting guests into your home. To help prevent identity theft, make sure that guests cannot gain access to any files (physical or electronic) that contain sensitive personal information.

9. Install smoke and carbon monoxide detectors.

Safety equipment like smoke and carbon monoxide detectors should be installed around the premises to protect guests and your property. Emergency exits should be properly labelled as well.

10. Child-proof your premises.

It’s likely that some of your guests will have children. To protect younger guests, take the time to properly child-proof your home.

11. Keep your accommodations maintained.

Good housekeeping can help guests avoid common injuries such as slips and falls. Prior to each stay, examine your home for any new housekeeping issues that must be addressed.

12. Provide contact information.

Always supply your guests with information sheets that indicate local emergency numbers and the nearest hospital. Provide a clear emergency contact number for yourself, as well as backup, for easy guest reference. Also make clear how you should be contacted if the guest has questions or issues arise.

13. Supply a first-aid kit.

In addition to providing emergency contact information, having a first-aid kit readily available and fully stocked at all times is important to guest safety.

14. Verity compliance with regulations.

Regulations around Airbnb hosting can differ depending on your location and the type of accommodation you are renting out. Double-check that you are compliant with local and provincial laws before using Airbnb.

15. Notify those who could be impacted by your guests.

When you host guests through Airbnb, there is the potential that neighbours or roommates could be impacted. To avoid unnecessary conflict, let your neighbours or roommates know ahead of time that guests will be using your property.

© Zywave, Inc. All rights reserved.

In today’s technologically advanced world, individuals have a unique opportunity to efficiently rent out their home, spare bedroom or other accommodations through Airbnb, an online hospitality company.

For travellers, Airbnb is a convenient platform that provides affordable and flexible alternatives to hotels. For property owners and tenants, the service easily connects various rental units with perspective occupants and makes collecting payments simple and secure. For the average homeowner, properties or spare rooms that are otherwise vacant can easily be transformed into a source of income.

Despite its convenience and the potential for profit, Airbnb is not without its risks for those who decide to list accommodations.

Potential Insurance Gaps

If you are considering renting your property through Airbnb, your first step should be to contact your insurance broker to review your current homeowners or renters insurance policy. Relying strictly on such policies while hosting guests through Airbnb can lead to significant gaps in coverage and leave you financially vulnerable.

While your homeowners or renters policy may allow you to rent your property to a guest, it is important to keep in mind that each insurer has their own restrictions and requirements. For example, some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to broaden your coverage.

Standard homeowners and renters insurance policies are designed for personal risks, not commercial use. If you plan to rent out your residence on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy to be properly insured. It should be noted that a growing number of insurance companies now offer home-sharing liability insurance policies that can be purchased on a month-to-month basis.

Even more alarming, your homeowners or renters policy most likely won’t consider damage to your property caused by guests a covered peril. This means you could be left to cover the cost of property damage caused by Airbnb guests.

Issues with Airbnb Provided Protection

To their credit, Airbnb does offer its hosts two forms of protection through their Host Guarantee and Host Protection Insurance. While hosts may be inclined to rely exclusively on these programs to manage their risks, there are significant gaps related to these offerings.

Host Guarantee

Airbnb backs every one of its bookings with its Host Guarantee program at no cost. Airbnb claims that this program will reimburse eligible hosts for damages up to $1,000,000. However, Airbnb readily admits that its Host Guarantee is not insurance and should not be considered a replacement or stand-in for homeowners or renters insurance.

Moreover, payments through the Host Guarantee are subject to a lengthy list of terms, conditions and exclusions. Therefore, hosts should be aware of the following issues related to Airbnb’s Host Guarantee:

• Hosts must attempt to resolve any issues with the guests involved prior to receiving any compensation. This also means that a host would have to make a claim on their own insurance policy before Airbnb would intervene.
• Any sum collected from a standard policy or a security deposit would be deducted from the Host Guarantee.
• The guarantee will only repair or replace covered property that is damaged during the timeframe of an online booking.
• This guarantee does not cover certain items including, but not limited to, cash, collectibles, jewellery, pets, watercraft or any damage to property that is not considered a covered accommodation.Host Protection Insurance
• In addition to its Host Guarantee, Airbnb offers coverage to its patrons through its Host Protection Insurance. Airbnb indicates that the program provides primary liability coverage for up to $1,000,000 per occurrence in the event of third-party claims of bodily injury or property damage. Despite Airbnb’s claims, hosts should be wary of relying solely on this insurance program for a number of reasons:
• For more information on specific elements of Airbnb’s Host Guarantee, hosts can review its terms and conditions in full here.

Host Protection Insurance

In addition to its Host Guarantee, Airbnb offers coverage to its patrons through its Host Protection Insurance. Airbnb indicates that the program provides primary liability coverage for up to $1,000,000 per occurrence in the event of third-party claims of bodily injury or property damage. Despite Airbnb’s claims, hosts should be wary of relying solely on this insurance program for a number of reasons:

• Intentional acts that aren’t the result of an accident are not covered under this policy. In addition, Airbnb’s Home Protection Insurance does not cover what they refer to as property issues, which can include things like mould, asbestos and bedbugs.
• Neither Airbnb’s Home Protection Insurance nor its fine print is readily available for review. What’s more, the policy is subject to limitations, conditions and exclusions. Together, this means that specifics around coverages are vague, and Airbnb hosts may not know what’s protected.
• The personal property of any guest is generally not covered. Additionally, any theft or damage caused by a guest may not be covered either.
• With Airbnb’s Host Protection Insurance, it’s best to assume that you aren’t equipped with the proper coverage. For full protection, it is likely that you will need to speak with an insurance professional to better understand the policy adjustments you will need in order to be fully covered.

Considerations for Condo Owners and Renters

While Airbnb opens its services to condo owners and renters, multi-unit buildings often have restrictive bylaws, homeowner association rules or lease terms that could impact one’s ability to host guests through Airbnb.

In many instances, commercial activities like renting out accommodations—even for short period of time—are forbidden by lease or condo board policies. In some cases, hosts will need to contact their landlord or condo board before subletting or renting any accommodations out. Failure to do this can result in eviction or other forms of legal action.

Even if you are allowed to rent out your condo or apartment through Airbnb, hosts should be aware that doing so can cause tension with neighbours. There’s the potential that your guests may not be respectful to property in common areas, act inappropriately or noisily, or make other tenants feel uncomfortable.

Local and Provincial Laws Considerations

In response to the rising popularity of Airbnb, many provinces, cities and towns are moving to regulate short-term property rentals through their municipal codes or zoning regulations. In some cases, home rental services like Airbnb could be prohibited altogether.

If you break these local regulations, purposely or otherwise, you could face thousands of dollars in fines. What’s more, Airbnb says alignment with laws and regulations is the responsibility of those renting out accommodations. Accordingly, it is imperative to review local laws and regulations before you commit to using Airbnb to rent out accommodations.

Tax Considerations

Income from all sources is taxable in Canada, including internet-sourced rental income. Consequently, any income derived from Airbnb rentals must be reported to the Canadian Revenue Agency (CRA).

Depending on number and nature of the services provided to guests, the CRA will consider money earned through Airbnb either rental or business income. Furthermore, if the income you make from Airbnb exceeds $30,000 per year, you will most likely have to register for a harmonized sales tax (HST)/goods and services tax (GST) account through the CRA and will be subject to the applicable taxes. Provincial sales taxes (PST) will vary from province to province.

For those who have already earned unfiled income through Airbnb, coming forward through Canada’s Voluntary Disclosures Program (VDP) is recommended. Through the VDP, penalties for unfiled back taxes will be forgiven.

For more information on the tax implications of Airbnb and to ensure compliance, hosts are encouraged to contact a tax professional or the CRA.

The Bottom Line

While Airbnb offers a unique and potentially profitable service to users, it’s not without its faults. Before you decide to try it for yourself, be sure to consider all of the risks.

Again, you’ll want to minimize potential financial fallout by purchasing the appropriate insurance coverage. To discuss your options further, have your insurance broker contact ABEX today.

© Zywave, Inc. All rights reserved.