Wealth Solutions reported it has become popular with millions of people to rent rooms, or even whole houses for the short term to travelers. Some of the platforms used are VRBO, Airbnb and other online rental services. The benefits of extra cash are enticing but there are some factors that home owners need to consider. There are some financial and legal issues that could crop up and cost more money than you are making. The platforms used to rent the property have no risk in the game but the home owner does and that is because of short term rental insurance issues.
Short Term Rentals
Home owner’s insurance policies look at short-term rentals as a commercial activity and don’t cover them. Failure to inform the insurance company of the rental business might just lead to policy cancellation when you file a claim for damages. The smart thing to do is to be honest with your insurance company and upgrade your policy to the appropriate level. Seeking a business liability policy is the smart move to protect your assets. Let your trusted insurance agent help you.
Risk in Renting
Renting a home or room to anybody comes with a large risk that a home owner is liable for. Injuries, damages, theft, illegal activities, lawsuits, etc. all are a part of the problem. Many municipalities force commercial licenses for bed and breakfasts. Seek legal counsel before taking on renters. The protection offered by Airbnb and others is often not enough to cover difficulties. They offer a $1 million host guarantee but that is not insurance and is secondary to insurance. They exclude certain losses and don’t protect hosts from many legal issues.
It is an enticing proposition to make extra money from a property that will supplement a financial situation. It emphasizes the point that a homeowner should seek the counsel of their insurance company and legal advisors in order to protect your rights. This should happen if you are considering renting in any capacity.
Richard Blair is based in Austin, Texas and is the founder of Wealth Solutions. Blair has been interested in finance his entire life and has dedicated his business to assisting all clients, individuals, families and small businesses in building wealth. He has developed an expertise in how to best assist people with all of their financial needs from retirement concerns. This enables his clients to bridge the gaps between their current retirement plans and what their needs are going to be. Wealth Solutions was founded in 1994 and has been flourishing ever since, guiding clients to all sorts of success.