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September - October 2018
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Disponible en línea en español.
Your Insurance
with
Cathy Karas
Cathy J. Karas, Certified Insurance Counselor, President, Karas
Insurance Agencies Inc, 321 So. Riverside Ave.,
Croton-on-Hudson, NY 10520
AIRBNB
and
Your
Homeowners
Insurance
In 2016, in a Sunday edition of the New York Times, there
were photos of a wealthy business man who owned an expensive
home in South Hampton and picture of another man, an
executive, who paid to rent out the home for a fundraising event
for shelter animals. The picture of the man who was renting
the house, showed him on the deck in a bathing suit with a
“champagne gun” shooting it into the huge crowd of people
below in the yard. Apparently the fundraising event went out
of control with much more attendance than anticipated, and
the end result being the owner claiming thousands of dollars
of damage to his home, furnishings and expensive art. What a
situation! Who is to say what the condition of these “damaged”
items were before the event, if they existed at all and what
their values were? It would be the homeowners word against
the “renter”. If the house was insured on a homeowners policy,
submitting and collecting for this type of claim would most
likely be denied since there was an exchange of money and
used by the renter for a “business”. A homeowners policy is
underwritten based on the owner/occupant and their family,
not for rental or a commercial exposure of any kind. Even if
the house was insured on a landlords’ policy form, since the
damage caused may have been intentional, there is typically
an exclusion for this. To insure art to its value, there would
have had to be a special endorsement with either an itemized
schedule, a fine arts “blanket” for the total value or separate
inland marine policy for what was on the premises. Injuries
sustained by either the person(s) “renting” your home, or
even occupying it while you are there and paying you a fee
for the rental, can also be uncovered claims. Again, you are
making money from this arrangement, which in the eyes of the
insurance company constitutes this as a “business”. A claim
denial for these situations would then mean your recourse
would being hiring an attorney as an out of pocket expense
and hope there would be restitution for your damages and/or
lost or stolen property. An uncovered bodily injury claim on
your property during any “rental” period not covered by your
policy, could mean a very expensive lawsuit. Even if there was
a commercial or landlord’s policy in place to accommodate
the “rental”, intentional damage caused could be excluded or
the personal property you own not insured to its full value or
replacement cost.
While participating in AIRBNB might sound like a good
idea to make some extra cash, renting your house out by the
day, week or month could mean you have no insurance for
this situation, and/or could be cancelled if the insurance
company finds out you are doing this either by checking
the AIRBNB website for your address or if you file a claim
that occurs while being rented. Although I understand
AIRBNB offers some insurance, I believe it to be only liability
insurance (bodily injury or property damage protection for
you). What about the structure and contents? As I have
stated in a previous article about homeowners insurance, a
homeowners policy is a legal contract between you and the
insurance company, drawn up by the insurance company.
The questions you answer on the application determines if
you will be accepted. This signed and dated application must
be answered truthfully. If you answered any questions falsely
and a claim arises, the insurance company can deny the claim
based on misrepresentation. Besides this rental situation of
AIRBNB, there are many other questions you better be sure
you answered honestly. These include, but are not limited
to if you have a dog or dogs and the breed or breed mix, if
you have a trampoline, pool, business or office occupancy,