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Short-term rental platforms and home insurance

But what about your insurance? Is your house or condo insured by the platform provider? Is it fully covered? To ensure you have a positive experience with this service, take the time to read through this article, and avoid any unpleasant surprises with your home insurance.

In this article:

Insurance available on short-term rental platforms: are you fully covered?
Why should you notify your insurer?
What your insurer needs to know
Impact on your premium
Tips for home owners, condo owners and tenants who use short-term rental platforms

Insurance available on short-term rental platforms: are you fully covered?

The 1st question you need to ask yourself when you’re deciding whether or not to put your house or condo on a short-term rental platform is: Is your home covered? Are you covered for any incidents that occur when you have guests staying in your home? While it’s true that some short-term rental platforms offer insurance programs, you need to be careful, because they don’t cover everything!

Different insurance programs don’t necessarily offer the same basis of settlement in the event of a claim. In some cases for example, the insurance program covers the actual cash value of property, while taking account of depreciation. That means you might absorb some of the financial loss when you make a claim. Standard home insurance generally covers the replacement value. It’s important to understand the difference between the 2.

These insurance programs may also only cover damages caused to property by guests and not cover damages caused by a fire as the result of electrical problems or a sewer backup. That’s why it’s essential that you notify your insurer so you can get the best coverage.

Why should you notify your insurer?

Short-term rental platforms mention that it’s essential that you notify your insurer if you’re renting out your home or condo.

Incidents are common when travellers are staying in your home. Before handing over your keys to strangers, it’s important to know what risks you’re exposing yourself to so you can insure yourself accordingly. The risk is high to rent out your home to partyers. Your insurer will take this into account in their evaluation. They may even impose restrictions on the coverage provided, or you might have to pay higher deductibles. They may also refuse to insure you if the risk too high.

According to a press release1 issued by the Insurance Bureau of Canada (BAC), it’s critical to notify your insurer if you’re renting your home to a 3rd party. Under most insurance policies, residences cannot be used for commercial purposes, like renting them out to 3rd parties for income. IBC recommends that you contact your insurer to let them know you’re planning to list your home on a short-term rental platform or other sites like Kijiji®. They’ll tell you whether or not they’ll insure you and under what conditions. You can then decide if you still want to use the service, with full knowledge of the risks involved.

What about the guests?

Some insurers only cover specific risks, like fire, explosion, smoke and damage caused by water when you’re renting properties you don’t own.

What your insurer needs to know

When you call your insurer to let them know you’re planning on listing your home on a short-term rental platform or another site, they’ll ask you various questions to assess the additional insurance risks. Here are the kinds of questions you can expect:

  • How many rooms are you renting?
  • How many guests do you plan to accommodate at once?
  • Will you be on the premises when guests are there?
  • How often do you plan to rent out your home?
  • Will you allow access to available facilities/equipment (e.g., pool, spa, sauna, bicycle)?
  • Will you be offering your guests any services (e.g., booking of activities, room service)?
  • What security measures are in place (e.g., smoke detectors, extinguishers and sprinklers, stair railings)?

Tip: Be clear and accurate to avoid any surprises in the event of a claim.

Impact on your premium

After you receive confirmation of approval from your insurer, your insurance premium will be calculated based on the risk of damage your property represents. If you change the use of your dwelling, it will have an impact on the associated risk. Depending on your situation, your premium will be affected. Every situation is different, so there’s no rule that can be applied to calculate the increase.

Remember, you’re often better off paying a higher premium by clearly describing the situation to your insurer than living with the consequences of not reporting the situation and suffering a loss.

Tips for home owners, condo owners and tenants who use short-term rental platforms

Leaving chocolates and tourist guides for your guests might get you positive feedback, but don’t forget to follow these helpful tips, to make sure you have a positive experience:

  • Choose your guests well: never rent out your home without speaking to the applicants and finding out their intentions.
  • Reduce the risk of theft: Don’t leave out valuables.
  • Stay in the area when you have guests, if possible. If not, get someone you trust to keep an eye on your property while you’re away and give your guests this person’s contact information.
  • Follow the safety tips provided on short-term rental platforms (though you’re not limited to those).
  • Become familiar with all of the guarantees, terms and conditions of the rental platform you’re using so you know exactly what you’re getting into.
  • If you’re a renter or condo owner, make sure you follow the building or condo association rules. Short term rentals are often not allowed.

The new short-term rental platforms are convenient. However, when it comes to protecting your home, don't leave anything to chance and properly prepare before going ahead. But most importantly, you should notify your insurer.

Short-term rental platforms and home insurance

Short-term rental platforms have been a game-changer for the real-estate market and the travel industry these last few years. These new platforms allow homeowners to bring in extra income and offer travelers an affordable alternative to pricey hotels. It’s easy to see the appeal!

  1. Press release – Insurance Bureau of Canada

Certain conditions, exclusions and limitations may apply. The offers and savings may change without notice. The terms and conditions of the coverages described are set out in the insurance policy, which always prevails. These tips are provided for information purposes only, are general in nature, and Desjardins Insurance cannot be held liable for them. We recommend using caution and consulting an expert for comprehensive, tailored advice.

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