An article surfaced earlier this month discussing short-term rental regulations for Louisville, KY. As the City Council has seen an increase of these businesses in residential areas, they are considering steps to ensure hosts, such as yourself operate under set guidelines. In the proposed legislation, they will require you to obtain a one-year permit for your short-term rental (30 days or less), along with the following details to include in your application:
- Number of bedrooms and overall sleeping capacity
- Contact information for 24-hour contact responsible for the upkeep of the property
- Standards to be complied with include parking, trash, special events, and more
- Conformity to building, electrical, plumbing and fire regulations
- Standard to be complied with for short-term rental insurance
Where does insurance fit in?
In years past, the argument has been over whether short-term rentals are businesses and what are appropriate precautions or regulations for cities to enforce. In the insurance world, business activity is defined as compensation over $2,500 in a given policy period (typically a year-long agreement). Many hosts make well over that in a given year.
By requiring you to secure short-term rental business insurance, the City is essentially demanding a higher level of care than normal residential use. This requirement comes with stricter insurance carrier underwriting requirements, often including property inspections for building, electrical, plumbing and fire requirements. In this case, regulations and insurance work hand-in-hand toward the mutual goal of safety for hosts, their guests, and the surrounding community.