ISO has introduced new homesharing insurance options to address exposures that policyholders may face when renting out all or parts of their homes.
The new homeowners coverage options and accompanying rating provisions have been filed on a multistate basis to offer additional protection for homeowners and renters who choose to participate in homesharing. They address a number of exposures faced by homesharing hosts including: liability, theft, vandalism, and damage to guests’ property.
The coverage is designed for homeowners renting space via online sites including Airbnb, HomeAway, OneFineStay and FlipKey.
The ISO filings will provide insurers with a convenient way to offer homesharing coverage to their home insurance customers.
Some insurance carriers have developed their own homesharing coverage. In August, giant Allstate began offering homesharing protection in six states — Arizona, Colorado, Illinois, Michigan, Tennessee and Utah — and said it plans to expand it to others in 2017. Hosts are covered for their personal property up to $10,000 per rental period. The endorsement, which Allstate calls HostAdvantage, can be added to an Allstate homeowners policy for around $50 per year.
In 2015, AIG’s Lexington Insurance began offering LexShare Home Rental Coverage that enhances protection for losses from property damage, theft, furnishing, even watercraft liability for homeowners sharing their property.
Insurtech startups are also eying the market. Slice has developed technology that supports the purchase of insurance policies that last for the period of time one is acting as a business. Slice’s first product applies to homeowners renting their homes on various homeshare platforms. Once signed up online or via app, the homeowner’s commercial lines coverage is triggered with a tap on the Slice mobile application and covers the time period the home is rented, whether an hour, days or weeks. Slice’s on-demand homeshare product has been released as a private beta to select homeshare hosts in Des Moines and Iowa City.
In a recent white paper on the subject of homesharing by ISO, the company said a number of incidents have been reported involving excessive property damage, theft of valuable items, and even bodily injury to guests on the homeowner’s premises as a result of participation in homesharing.
ISO says that some homesharing services have provided guidelines and limited insurance coverages to those renting out their homes. Airbnb offers limited property damage and liability protection for hosts who rent their space using their sites.
ISO says that many people participating in homesharing may assume they are covered by their homeowners insurance policy should something happen to their home by a homesharing “tenant.” However, their policies may in fact exclude coverage for rentals.
ISO said in its white paper that its homeowners program did not contemplate homesharing when it was developed, but many long-standing provisions are included that restrict coverage for homes used as rentals, including eligibility, property and liability coverage exclusions.
A few cities and states have passed regulations addressing the use of a primary residence for short-term rentals, further complicating things for homeowners participating in homesharing.
“Homesharing has created a new source of income for millions of people who’ve turned their empty homes and spare bedrooms into short-term accommodations for visitors from around the world,” said David Cummings, senior vice president, insurance operations and analytics at ISO. “But it’s also created new risks for insurers, who historically didn’t consider homesharing when underwriting homeowners policies. Our new endorsements provide insurers with the tools to address the growing trend in the sharing economy.”
ISO provides statistical, actuarial, underwriting, and claims information and analytics for the commercial and personal lines insurance markets.