So what happens if all your cherished belongings are stolen, or there’s a wild party and the place gets trashed to somebody you rented it to on Airbnb? What happens if someone get hurt? Yes, it is true that Airbnb now provides liability insurance for up to a million dollars. Read the fine print before you list.
Keep in mind that a lot of insurers don’t cover you on standard policies when you start renting your home on airbnb. What’s more, even if your visitors are well behaved, if you haven’t informed your insurer you could be in trouble. Renting out all or part of your home without telling your insurer could void your home cover permanently. Before you even think about doing this, get the right protection in place.
Purchasing coverage from well-known insurance carriers can be tricky. This is because insurance carriers class you as a greater risk as they think the chances of damage, robbery or things going missing increase.
Call your home insurer and tell them what you’re planning to do. They may expand your existing coverage for an additional fee to your premium. Shop around and get an estimate and compare prices.
The price you pay, and whether your insurer decides to cover you at all, will depend on whether it’s a spare room you’re letting out or the whole property, how often you’re planning on doing so, how many people are staying and your previous claims history.
Your premiums are likely to increase if they agree. You can do this for standalone home or contents insurance, or for a combined policy.
Yet even with an extension to your home insurance, many policies don’t cover theft or accidental damage by paying guests, which means a whole host of things won’t be covered– such as if your guests damage your wood floor or steal your 52” TV. Always check the small print.
The alternative option to get insurance coverage is to contact an independent broker like us and we’ll customize an estimate for you. You can do this if your home insurer will not extend your coverage, or even if they do, so you can be sure you’re getting the best rate and coverage.
Remember that the additional premium costs are tax deductible according to Jasmine DiLucci, CPA, EA. So although there are additional costs involved, there is also the prospect of extra revenue.
Less than 15 days:
If you rent out your personal residence for less than 15 days, then you do not need to report any of the rental income and do not deduct any expenses as rental expenses.
More than 15 days:
If you rent your personal residence for more than 15 days, then you can apportion your household expenses (insurance, utilities, interest etc) between the number of days your house was used for personal and used for rental.
In the case of you renting out your house while you are still using it for personal, I would recommend staying on the conservative side and counting it as a personal use day when it comes to your expenses/deductions. I would still count it as one of the 15 days in calculating whether or not you need to report the rental income.