MN Dept. of Commerce: As Super Bowl approaches, Minnesota Commerce Department urges homeowners to learn about insurance and short-term rentals

Minnesota Department of Commerce


Leading up to the Super Bowl on Feb. 4, thousands of Minnesotans are expected to offer their homes as short-term rentals to accommodate the crush of out-of-town fans. While the idea of taking advantage of an influx of visitors to rent out a home is appealing, homeowners should be aware of the insurance implications.

“Minnesotans need to consider if the benefits outweigh the risks of opening up their home for Super Bowl spectators,” said Commerce Commissioner Jessica Looman. “We encourage homeowners to read the fine print of their homeowners insurance policy and check with their agent or insurer to determine if additional coverage is needed to cover the risk of renting to short-term guests.”

• Evaluating the risk:

What if your guest vandalizes your property, the common space in your condo or even your neighbor’s landscaping? What if your guest gets injured on your property?  Who pays? 

It might be you, not your insurance company – because many homeowners insurance policies will not cover property damage caused by paying guests or the costs of injuries they suffer.

Accidents can happen anytime, anywhere and to anyone. Even if you take preventive measures, someone could trip, fall or experience some other injury in your home. Although most homeowners policies cover these types of injuries, many will not cover injuries to paying guests on a property offered as a short-term rental. If you decide to list your property on a short-term rental site, talk to your agent or insurer to make sure you are protected.

Homeowners should also review the terms of their homeowners association (HOA) bylaws, if applicable, and check if their local community has an ordinance regarding short-term rentals. Both Minneapolis and St. Paul recently adopted new regulations, anticipating an increase in short-term rentals during the Super Bowl.

• Protecting yourself as a host:

Homeowners policies vary, but often exclude or provide limited coverage for homeowners running a business in their home. If you list your property for short-term rental with any frequency, there is a good chance that this activity will be defined in the policy as a home-based business.

Many policies contain a business exclusion that eliminates liability coverage of bodily injury or property damage for business activities. It is typical for a policy to include language allowing an owner to take in boarders on occasion, but “occasional” is generally not defined.

One option is to purchase a landlord policy that covers your home, structures on the property, property contents (such as appliances and furniture), lost rental income due to building damage, legal fees and liability claims.

An additional option is to rent only to guests who can prove they have homeowners, renters or personal liability insurance. Guests may have coverage under their own policy. However, homeowners policies often provide minimal liability coverage (for example, only up to $1,000) for damage to property of others. Additional coverage may be available.

• Understanding your insurance coverage options:

Airbnb currently offers a host protection insurance program to all of their hosts in the U.S. The program provides liability coverage with $1 million in coverage. Airbnb’s coverage does not include medical expense or personal liability. Airbnb also has a host guarantee that reimburses hosts for property damage caused by guests due to accident or fault, if the guest does not otherwise reimburse the host. Hosts must ask the guest for payment first. Airbnb will reimburse the host for damages up to a limit of $1 million.

HomeAway, a subsidiary of Expedia Inc., does not provide insurance coverage automatically for hosts. It recommends that hosts purchase a customized policy through an insurance broker.

Anyone intending to list a property or book a vacation through a short-term rental or home-sharing company should read the policies and contracts offered by the company.

If you are thinking of getting coverage from a company other than your current insurer, check to be sure the company is licensed in Minnesota by using the license lookup tool on the Commerce Department website and confirm that it is a “surplus lines carrier.” This type of insurance covers risks that are considered unique.

Minnesotans should be aware that surplus lines carriers are not covered by the Minnesota guaranty fund. This means that if the company has financial problems and goes out of business, policyholders would not have the protection of the Minnesota Insurance Guaranty Association, which would pay the company’s outstanding claims.

• Commerce is here to help:

If you have a question or concern about your insurance, contact the Minnesota Commerce Department’s Consumer Services Center by email at consumer.protection@state.mn.us or by phone at 651-539-1600 or 800-657-3602 (Greater Minnesota).

 


— The Commerce Department is here if you have questions, or believe you have been the victim of a scam or fraud. Contact the Department’s Consumer Services Center at 651-539-1600. Complaints can also be sent by email to consumer.protection@state.mn.us  or by mail to Minnesota Department of Commerce, 85 Seventh Pl. E., Suite 500, St. Paul, MN 55101. 

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