The concept of "home sharing," championed by companies like Airbnb, has been incorporated into some homeowners policies, though the extent of coverage can differ quite a bit across carriers.
Liberty Mutual Fire Insurance Co., for instance, has actively worked to update its policies to reflect home sharing activity. In October, the Liberty Mutual Holding Co. Inc. subsidiary submitted a filing to D.C. regulators that introduced an endorsement expanding its base homeowners policy. Normally, the Liberty Mutual policy only covers short-term rentals up to 31 days. With the new endorsement, however, the policyholder can extend that timeframe.
The endorsement also provides potential coverage for loss of rent. If a covered loss makes the residence unfit to live in, the policyholder can recover the rental income that he or she would have received at the time. Additionally, the endorsement provides, at replacement cost, up to $1,000 per occurrence for property damage caused by the insured to the property of others.
Coverage might be poised to grow at other insurers as well. Verisk Analytics Inc.'s ISO, which develops policy forms that help insurers craft policies, said November 15 that it introduced new homeowners coverage options and accompanying rating provisions related to home sharing. These address a variety of risks confronting hosts, including liability, theft, vandalism and damage to guests' property.
ISO identified three rating variables to look at when expanding home sharing coverage. As detailed in a filing, the variables are the type of rental, how long the host rents out the premises and the increased limit of liability for property damage. The type of rental deals with whether the entire residence is being rented. If the host rents the whole residence, the exposure is considered equivalent to a non-owner occupied dwelling, for which a factor is already available. By contrast, if the host is renting out a separate dwelling or a partial unit, the policy assumes that the insured is on the premises, and therefore the exposure is reduced.
In addition to the new coverage options, ISO has developed other guidelines for insurers, including an advisory notice that lets policyholders know the limits of their existing policy. Pennsylvania National Mutual Casualty Insurance Co., for instance, informed regulators in an October filing that it would be adopting the ISO advisory.But not all insurers are looking to expand their policies just yet. For instance, Employers Mutual Casualty Co. wrote in a Tennessee filing that it was "not in a position to adopt" the ISO revision, and Amica Mutual Insurance Co. indicated in an Idaho filing that it would not adopt the revision on March 1, 2017, which is the date ISO slated for the revision to take effect. Some insurers exclude home sharing activities outright, such as Edison Insurance Co. In a homeowners filing submitted to Florida regulators, the company said it will exclude losses arising out of participation in a home sharing or bed and breakfast program, such as Airbnb, Flipkey, and HomeAway.