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 passed ordinances and laws which all have some type of insurance requirement.
Newport, OR is one such city, requiring $1,000,000 liability insurance that must cover the short-term rental operations.
Newport Municipal Code:
Liability Insurance. Letter of intent to insure (for new applications) or certificate of insurance (for renewals) establishing that the owner will have, or has, liability insurance which expressly covers the vacation rental operations on the subject property in the amount of $1,000,000 combined single limit for bodily injury and property damage. Where letters of intent to insure are provided, certificate of insurance shall be submitted to the city prior to use of the unit as a short-term rental.
There is only one type of liability insurance which covers such business activity: commercial general liability (click here for a quote). This type of liability is found in business insurance policies and protects the insured against claims of bodily injury or property damage they could be found legally liable. It is the most comprehensive liability insurance an owner can purchase.
What about the Airbnb Host Guarantee?
Evian Gutman, founder and CEO of Padlifter, explains the details of the Host Guarantee and what short-term rental operators should be aware. One blatant concern being the Host Guarantee is not insurance:
The Terms and Conditions of the Airbnb Host Guarantee make clear that it is not an insurance policy. The T’s and C’s state:
“These Airbnb Host Guarantee Terms are not intended to constitute an offer to insure, do not constitute insurance or an insurance contract, and do not take the place of insurance obtained or obtainable by you. Furthermore, these Airbnb Host Guarantee Terms are not an insurance service agreement as defined in a standard ISO renter’s or homeowner’s insurance policy.”
As this was never intended to be an insurance policy and does not function as such, it cannot meet city requirements like those held in Newport and other cities with strict short-term rental regulations such as Denver, CO.
Insurance Fits with Regulation
Commercial general liability insurance requirement is good for owners and good for the city. It creates a barrier to entry which eliminates non-professionals and it comes with stricter insurance carrier underwriting requirements. These requirements such as smoke alarms in all bedrooms, fire extinguishers, railings on all open stairways, ultimately encourage a high level for standard of care.
Proper Insurance works with homeowners in all 50 states to provide the best coverage for their short-term rental needs.
Get a quote online or give Proper a call today at (888) 631-6680