Staff Report for The Island Connection
Over the past several years, the private rental market has changed immensely with companies such as Airbnb, VRBO, Homeway, etc. Today, individual homeowners can rent their homes or single bedrooms simply with nice photos and a smartphone. “For property owners and tenants, the service easily connects various rental units with perspective occupants and makes collecting payments simple and secure. For the average homeowner, properties or spare rooms that are otherwise vacant can easily be transformed into a source of income,” said Mandy Davis, an agent with Anderson Insurance Associates.
Anderson Insurance Associates makes it a point to understand each client’s life events and business goals. In today’s market, that means providing quality insurance that covers gaps and risks inherit in the rental market. “Standard homeowners and renters insurance policies are designed for personal risks, not commercial use,” explained Davis. “If you plan to rent out your residence on a regular basis, many insurance companies will consider this commercial use.”
Relying strictly on homeowner or renters insurance policies while hosting guests can lead to significant gaps in coverage that will leave you financially vulnerable.
While your policy may allow you to rent your property to a guest, it is important to keep in mind that each insurer has its own restrictions and requirements. “An example,” Davis said, “would be that some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to broaden your coverage.” As a result, most homeowners and renters policies won’t cover property damage that’s caused by guests. In many cases, hosts listing on these sights would still need to obtain a commercial insurance policy in order to be properly insured. These commercial policies are still needed even when the host sites offer a host guarantee at no cost, claiming reimbursement to eligible hosts for damages up to $1 million. The sites, however, even admit that this guarantee is not insurance and should not be considered as a replacement for insurance. The guarantee also will not go into effect until after a claim has been filed with the private insurance company. Further, many local municipalities in South Carolina, including the coastal and barrier islands, often require business licenses whether it is a short or long-term rental. Payment of an annual rental registration fee as well as sales and accommodations taxes may also be required.
“It is extremely important if a homeowner decides to rent out their property to make the first step by contacting their broker to review their current homeowners or renters insurance policy,” finished Davis. “Anderson Insurance Associates offers home-sharing insurance, which provides the host with excess liability coverage and loss of earnings for short-term rental activities, that is not typically covered by a homeowners policy.”
Anderson Insurance Associates, a Charleston-based Independent Insurance agency, has served residents of the Lowcountry since 1981. Located in Charleston, Greenville, James Island and Pawley’s Island, the agency has been able to continuously provide high quality insurance products, including the very important home-sharing insurance for the short-term rental.