lawsuitIn early October, the city of San Antonio elected to regulate their burgeoning short-term rental market as a means to address concerns expressed by various parties. The proposed regulations would require that the rental operators pay a registration fee to the city, as well as pay a lodging tax similar to what a hotel operation would be subjected to. This seems to fall in line with measures taken by other cities that sought to deal with perceived problems that have arose from short-term rentals. The regulations also seem to curtail the density of rental properties in residential areas and prohibits these properties from being used to host events or serving food. From an outside perspective, it appears that the goal of these regulations is to decrease the likely hood of ‘’something bad’’ from happening while protecting property values and housing availability. In short, the city is attempting to walk the fine line of keeping all involved parties equally happy.

Going back to preventing “something bad” from happening, it is somewhat strange that the city takes these kinds of measures without requiring that short-term renal operators carry commercial liability insurance as they would any other business. To be clear, operating a short—term rental is indeed a commercial endeavor and should be treated as such. Other cities have recently required such operations to carry at least some amount of liability coverage in the event that something should go wrong. Make no mistake, liability insurance is something that is definitely required when operating a lodging business. Should a tenant injure themselves or somebody else, it is entirely possible that the operator of the rental property could be held liable. Whether or not there is actual fault on the part of the operator, defending oneself in court is more than enough to force someone into bankruptcy. Liability insurance thus exists to help protect the operator from these risks. A more complete form of regulation should require the carrying of liability insurance for short-term rental operators. This ensures that bystanders are protected from any negative externalities and operators are protected against the perils of running a lodging operation.