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Toronto townhouses and condos are usually covered by homeowners insurance policy. But here is what a lot of people are not aware of – These policies hardly cover liability from a short-term rental.
A short-term rental is a viable economic solution for property owners and guarantees extra cash while you are away from your home. Insuring your short-term rental is more than a choice or an option. Short-term rentals come with certain risks such as theft, property damage, vandalism and other commercial liabilities. These translate into a different category of liability not usually covered by your regular homeowner’s policy. The lack of adequate coverage could result in major financial liabilities regardless of how long the guest stayed in the rental property.
Here what every homeowner should consider before insuring short-term rentals.
[home_insurance_square_widget]1. Existing Insurance PolicyA great place to start would be to review the existing insurance policy. The homeowner’s insurance policy is designed to cover property damage and liability arising from the owner’s occupation of the premises. This implies that claims that do not arise from the owner occupying the property will be invalidated by the insurance policy – which is what short-term rental risk suggests.
Short-term rentals can be classified as commercial/business activity on the property which is the basis of its exclusion from the policy. Although some insurance companies allow the homeowner’s policy to cover rentals for a famous holiday or occasion, this does not include the totality of the risk of regular short-term rentals.
Contacting your insurance company for a full explanation of the coverage of the existing policy will help you to determine your liabilities in a short-term rental.
2. Home-sharing Companies Insurance
Simply put, having a home in a townhouse in Toronto or condo is an investment on the right track. But the existence of inadequate insurance for your property during short-term rentals could effectively jeopardize that investment. It is important to seek out additional insurance for your property.
Personal insurance companies offer policies specifically targeted at insuring the property during short-term rentals. Obtaining coverage of this nature safeguards the interest of the homeowner during that period.
Taking out a business/commercial policy is another option available. This falls in line with the nature of the rental. The commercial policy will cover the property from the activities of third parties during their stay in the rental and injuries.
If you carry out short-term rentals frequently, you can register the activity as a Limited Liability Corporation (LLC). This guarantees tax advantages and ensures comprehensive insurance for the property as a business.
Compared to the cost of legal fees arising from actions against the homeowner by guests of the short-term rental, ensuring that your property is adequately insured is a small price to pay.
3. Short-term rental Insurance
Simply put, having a home in a townhouse in Toronto or condo is an investment on the right track. But the existence of inadequate insurance for your property during short-term rentals could effectively jeopardize that investment. It is important to seek out additional insurance for your property.
Personal insurance companies offer policies specifically targeted at insuring the property during short-term rentals. Obtaining coverage of this nature safeguards the interest of the homeowner during that period.
Taking out a business/commercial policy is another option available. This falls in line with the nature of the rental. The commercial policy will cover the property from the activities of third parties during their stay in the rental and injuries.
If you carry out short-term rentals frequently, you can register the activity as a Limited Liability Corporation (LLC). This guarantees tax advantages and ensures comprehensive insurance for the property as a business.
Compared to the cost of legal fees arising from actions against the homeowner by guests of the short-term rental, ensuring that your property is adequately insured is a small price to pay.