For many NH residents, it is very tempting to list their homes on vacation rental sites such as Airbnb. Usage of such sites is a great way to earn extra income. Still, regular short-term rentals of New Hampshire properties generally are not covered by standard homeowners insurance policies, so what are the options? There are a few options to consider on how to get insurance for Airbnb in NH.
How Do I Insure My Airbnb Short-Term Rental?
Option 1: Rely on Your Existing Homeowners Insurance
Although homeowner's insurance policies generally don’t cover regular short-term rentals, like Airbnb, some policies might cover the occasional rental. If your policy allows for occasional rentals and you do not have many Airbnb guests staying, you might be able to rely on only your existing NH homeowner's policy.
This is the easiest and most affordable insurance solution for Airbnb, as you don’t have to purchase any additional insurance. The solution only works when your home is rented less than the number of nights your policy allows; however, do not assume anything!
Contact your insurance agent and ask them specifically about your carrier's guidelines before you list or rent your home. An agent can help you determine whether your homeowner's policy covers any short-term rentals and how many nights your home can be rented if coverage is included.
Option 2: Insurance Directly from Airbnb
Because many Airbnb hosts need additional insurance, the company offers insurance directly when accepting bookings. Airbnb offers Airbnb Host Protection and Airbnb's Host Guarantee Insurance, which are two distinct protections.
Airbnb Host Protection may offer up to $1 million to cover the host's legal responsibility for bodily injury or property damage of guests.
Airbnb's Host Guarantee may offer up to $1 million for damage to your place or belongings caused by guests.
This is a great feature for those listed on sites such as Airbnb, as it may provide the coverage needed. That said, even on Airbnb's website, it states that "Airbnb's Host Guarantee is not an insurance policy, and not all property damage caused by guests is within its terms. Hosts who want more protection may want to consider purchasing personal insurance..."
While Airbnb Experience Protection Insurance is convenient and offers essential protection, there are other factors to consider, such as:
- Claim filing: There is wording in the host guarantee that could cause an issue with successfully filing a claim as there is a limited window to do so. If you don't visit your property after each visitor and act quickly, you could have a coverage issue.
- Non-standard market: It is also noted that the insurance offered is through a non-standard market, which means the company is not required to file their underwriting requirements or financials to the state for approval, leaving a lot of uncertainty.
- Coverage may not be adequate: Filing a claim may with Airbnb not be as easy as filing a claim through an insurance agent who knows you, while some significant claims (e.g. serious injuries or deaths) could exceed the $1 million limit. Additionally, there are some potential incidents that this insurance could exclude.
- Airbnb will not satisfy a lender for meeting an insurance requirement. Even if you only plan to use the property for Airbnb, a lender will require you to provide proof of insurance for closing, apart from what Airbnb offers.
In short, we would strongly recommend that you inform the insurance agent or company that insures your home that you plan on doing short-term rental, and not rely solely on Airbnb.
Option 3: Add a Home-Sharing Endorsement to Your Homeowners Policy
An alternative to Airbnb’s insurance offering is to purchase a home-sharing endorsement that gets amended to your homeowner's insurance policy.
An endorsement is a narrowly defined coverage that adds protection, adding protection for certain short-term rental risks in this case. Because an endorsement is narrowly defined, it tends to be quite affordable, but not many companies offer this option.
Compared to Airbnb’s insurance solution, a home-sharing endorsement might have slightly different coverage terms that offer more protection, and it may have higher limits. An endorsement could also be a more affordable solution since it is not a stand-alone policy.
Option 4: Purchase a Home-Sharing Insurance Policy
If you own one or more dedicated Airbnb properties, purchasing a home-sharing insurance policy might be the best solution. Such a policy will likely give you the greatest flexibility on coverage, deductibles, and limits, allowing you to customize the policy to your needs. The policy may also have several ways you can qualify for premium discounts.
Home-sharing insurance policies are growing in popularity in New Hampshire and many companies are meeting the demand. An insurance agent, like HPM Insurance, who is familiar with this type of insurance will help you compare the various home-sharing policies that are available.
Other Considerations: Umbrella Insurance
Regardless of how you insure your short-term rental, it is strongly suggested you also purchase umbrella insurance. Umbrella insurance is a separate policy that provides additional liability protection over the other personal policies you have in place. Like the homeowner's policy covering your short-term rental home, you will also want to inform the umbrella carrier that you are renting out the home to ensure you get the coverage you expect if needed.
Explore Options With a New Hampshire Agent
If you need help deciding how to insure an Airbnb rental property, contact the independent insurance agents at HPM Insurance. Our agents can review your situation and explore coverage options with you, and they can offer guidance to help you find the best solution for your New Hampshire property.