If you are considering listing your investment property, secondary home or primary residence in the short-term rental market than this article is for you. 

Airbnb was founded in 2008 as a way to help ordinary people use one of their largest assets and expenses (housing) to generate some extra income. Most Seattle Airbnb listings are by a home owner, renting their primary residence on a short term basis while away on vacation or work.  This make up 81% of the rentals.  An additional 14% are those renting secondary homes. A total 50% of all Seattle Airbnb rentals are rented for less than 30 days a year.

Insurance Rating

Insurance rates for a single family home insured as a landlord property vs. an Airbnb/VRBO rental are on average 60% higher.  

Our agency recently issued an apartment policy for a (5) unit building policy with 3 of the 5 unit being rented with Airbnb.  The policy was moved from a standard market carrier to an outside market creating a 150% rate increase due to the short-term rentals exposure.  Airbnb/VRBO properties are rated much like hotels as there is an increased liability exposure with the multitude of tenants coming and going, not taking pride of ownership nor knowing the properties well. Our client’s annual rate for her building went from $1,629 per year to $4,050 for close to the same coverage.

Some may consider not mentioning the short-term rental exposure to their insurance agent, however most landlord policies exclude short term rentals.  It would not be advised to put your investment at risk for an insurance savings.   Making sure that you have adequate insurance is one of the most important steps you can take if you decide to rent out your home.  Airbnb does offer some liability coverage for hosts, but don’t assume that that will fully protect you or that your normal homeowners or landlord policy will cover the full rental risk. Instead, contact your insurance agent and find out exactly what you must do to ensure you are adequately covered.

In conclusion, short-term rentals can work beautifully for some with second homes that sit empty or those that require the extra income to keep afloat.  Understanding your investments and the risks that come along with renting and maintaining your properties is the ultimate key to success!

This article was written by Stacey A Scott Insurance Agency Inc. & Madison Avenue Insurance Group; 14400 NE 145th Street Woodinville, WA 98072www.madisonaveins.com;
www.farmersagent.com/sscott; 425-318-7378

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