Condos and homeowner’s associations in warm weather areas are filled with owners who want to rent out their properties on Airbnb and VRBO in order to make some extra money when they’re not living there. While these short-term rental properties are a great way for the property owners to make extra money, they create a headache for the HOA, condo association, and sometimes even the owners themselves.
Clearly, failing to have the right insurance precautions in place can result in liability problems. Here’s what you need to know.
Why Short-Term Rentals Create Additional Risk
Some HOAs have banned owners from listing their properties on the short-term rental market for many reasons, including the increased risk of property damage. Accidents in common spaces and private ones make the situation even more precarious without having the right insurance coverage. For those HOAs that do allow their owners to list their homes on VRBO and other platforms, they have to deal with these risks and others:
- Guest injuries in common areas
- Property damage caused by renters
- Theft or vandalism
- Noise complaints and disturbances
- Increased wear and tear on buildings and amenities
The problem? Your insurance may not cover short-term rental guests, forcing you to pay for damages and other mishaps out of pocket.
Insurance Considerations for Unit Owners
Since homeowner’s and condo insurance policies may not cover the liabilities raised by renting out a property, you need to have other insurance options in place. Renting out your property on a short-term basis is often considered to be a “business” by your insurance company, allowing them to deny your claims on the grounds that the policy doesn’t cover problems brought about by those activities. Instead, you’ll need a specialty policy that does.
In order to obtain these policies, you’ll need to contact your insurance agent and tell them of your plans. They can then help you find the best options. Check with your HOA or condo association as well because they may have specific policies that you need in order to operate under their guidelines. Pay attention to what is and isn’t covered by the policy so that you can create rules for your guests to follow, as well as make sure that you have the right coverage limits.
Reducing Insurance and Liability Risks
In addition to ensuring that the right insurance policies are in place, there are a number of other things that your HOA or condo association members can do to lower their insurance premiums and liability risks at the same time. These practices include:
- Establishing clear rental rules and occupancy limits.
- Requiring compliance with association bylaws.
- Maintaining common areas and safety features.
- Documenting incidents involving guests.
- Reviewing insurance coverage annually.
- Encouraging unit owners to carry appropriate individual coverage.
Have Questions? Contact Charlotte Insurance
Want to learn more about the importance of having the right policies in place for short-term rentals in your HOA or condo association? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan you need.