Reviewed and updated 7/2/2020
Laguna Beach banned short-term rentals back in September 2016 but now The California Coastal Commission has shut down their Airbnb restriction, citing that it restricts access to the area’s beach and effectively shuts down most of the city’s access to rentals. While the law still remains in effect, the city officials will need to go back to the drawing board and draft a new ordinance. This could take up to 1 year.
Update: Laguna Beach adopted a new short-term rental ordinance in June 2019, requiring hosts to secure a permit and maintain appropriate liability insurance. The short-term rental ordinance states, “the property owner must maintain liability insurance (homeowners or rental property insurance) in the amount of not less than $500,000 to cover injuries, damages, losses and other claims associated with the short-term lodging.” Additional requirements include the following:
- While the short-term lodging unit is rented, the operator shall designate a local contact person that will be available 24-hours per day, seven days per week for the purpose of responding within 60 minutes to any issues.
- All advertising (print, online, etc.) must include the City business license and Administrative Use Permit or Conditional Use Permit numbers.
- A valid business license issued by the City for the separate business of operating short-term lodging unit(s) shall be obtained prior to renting short-term lodging.
How insurance fits into short-term rental regulation
With the explosive growth of short-term rental properties found on websites such as Airbnb and Vrbo, communities are struggling to find common ground regulation. Many communities have already passed ordinances and laws with which all have some type of insurance requirement. The concern is most are inadequate and often misleading.
A common mistake with insurance requirements is the City doesn’t define the type of liability insurance. There are three types of liability coverage one can purchase for a short-term rental. Laguna Beach states hosts must maintain either homeowners or rental property liability insurance. However, a traditional homeowner’s policy excludes “business activity” (i.e. short-term rental), and doesn’t provide coverage for claims associated with short-term rentals.
Short-term rental hosts need commercial general liability coverage. Proper Insurance offers a full-replacement policy including normal homeowners coverage and coverage for the business activity of short-term rentals.
Call Proper today to discuss your short-term rental scenario and receive a comprehensive quote – (888) 631-6680!