There are several reasons why you might want to rent out your house, condo, or cottage on a short-term basis through an online platform such as Chalets au Québec , LesPAC , Kijiji , Homeaway , and, of course, the well-known Airbnb *.
Whether financial reasons or a prolonged absence prompt you to rent out your home for a short period of time, this will have an impact on your home insurance. In this article, Assurances Multi-Risques explains what insurers consider to be a short-term rental and how to properly insure your property while you are away.
*Airbnb ne sera pas abordé dans cet article, comme un article sur le sujet a déjà été publié. Nous vous invitons d’ailleurs à le consulter.
What is short-term rental for a home insurer?
Each insurer has its own definition of a short-term rental. The duration of a short-term rental may vary from one insurer to another, but generally, to be considered short-term, a rental must last from one day to less than one year.
However, regardless of the length of the planned rental period, the most important thing is to notify your home insurer! If you fail to declare this activity, your insurer may refuse to compensate you in the event of a claim. This is because renting out a residence is considered a professional activity since it generates income… and professional activities are excluded from most home insurance policies!
How to insure your home during short-term rentals?
As mentioned, the first thing you should do to properly insure your home during a short-term rental is to contact your insurance company. Don’t be surprised if your insurer refuses to continue covering you… If this happens, we strongly advise you to contact an insurance broker with expertise in the sharing economy and short-term rentals. They will shop around for home insurance on your behalf and find coverage tailored to your situation at the best price, without you having to make multiple calls.
In addition, some insurers may agree to continue covering you by adding an endorsement and the words “Short-term rental of your residence” to your specific conditions. If this is the case, we strongly advise you to also add rental income loss coverage. This way, if your budget is calculated as if your residence were rented X days per year and it burns down, you could be compensated for the loss of rental income.
However, the most important thing to ensure your property is properly insured during a short-term rental is that your insurer is aware of this activity and that you have written proof. Written words remain, spoken words fly away…
In conclusion, renting out your house, cottage, or condo on a short-term basis can be a very attractive source of additional income and allow you to treat yourself… unless a disaster occurs without you having notified your insurer of this activity! In that case, they may refuse to compensate you. So before you embark on this adventure, don’t forget to notify your insurance company. Also take the time to assess the additional costs to your home insurance and contact an insurance broker to check the profitability of your project.