Summer isn’t too far off, meaning thousands of Canadians will visit various destinations nationwide. Naturally, all those travellers will need somewhere to stay while on the road. Therein lies an opportunity for homeowners who sign up as Airbnb and VRBO hosts.

It’s easy to see why the short-term vacation rental business has blossomed in Canada. For about the same price as a hotel room, customers of Airbnb and VRBO can rent an entire home or condominium, many of which are in unique locations. But a lot of work is involved with successfully managing a VRBO or Airbnb rental property.

According to Statista, revenue in the Canadian vacation rentals segment is projected to reach $2.57 billion in 2023, and is expected to rise to $2.63 billion by 2027. Additionally, a host’s average revenue per guest is estimated to be about $360.26.

A couple checking in to a VRBO or Airbnb rental.

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However, a soft underbelly exists for Airbnb and VRBO hosts: how do they deal with the cost of unexpected damages, losses, accidents, and potential third-party lawsuits? You might think a private homeowner insurance policy is sufficient to safeguard a host from such risks. But that’s not necessarily so.

Why a Homeowner Insurance Policy May Not Protect Airbnb and VRBO Hosts

Insurance companies generally consider home sharing, such as renting your home on Airbnb or VRBO, a commercial activity or a business. Home insurance policies are typically designed to cover a homeowner’s primary residence and do not usually cover commercial activities or short-term rentals.

It depends on the specifics of your home insurance policy, of course. Most standard home insurance policies are designed to cover a homeowner’s primary residence but may not cover short-term rentals or commercial activities. If you are renting out your home on Airbnb or VRBO, you may need to purchase a small business insurance policy, such as Airbnb insurance or VRBO insurance, to protect against potential liabilities or damages.

It is essential to review your home insurance policy and contact your insurance provider to determine if your policy includes coverage for short-term rentals or if you need to purchase additional coverage.

What Risks Do Airbnb and VRBO Hosts Face?

Airbnb or VRBO hosts face risks that could result in financial losses or legal liabilities. Here are some of the most common risks that hosts face:

  • Property damage: Hosting guests in your home increases the risk of property damage, such as damage to furniture, appliances, or other personal property. Damage could be accidental or intentional, and it may exceed the security deposit paid by the guest.
  • Liability claims: Hosting guests in your home also increases the risk of liability claims, such as injuries or accidents on the property. If a guest is injured while staying in your home, they may file a lawsuit against you, alleging negligence or other claims.
  • Theft or vandalism: Hosting guests in your home increases the risk of theft or vandalism. Guests could steal personal property or cause damage to your home.
  • Illegal activities: There is a risk that guests may engage in unlawful activities, such as drug use, prostitution, or theft. You could face legal liabilities or damage your reputation if criminal activity occurs on your property.
  • Loss of income: If your rental property becomes uninhabitable due to a covered peril, such as a fire or natural disaster, you may lose rental income while repairs are underway.

Beyond investing in Airbnb or VRBO insurance, hosts should take steps to minimize risks, such as conducting background checks on guests, setting clear rules and expectations, and providing clear instructions on using appliances and equipment in the rental property.

How Does Small Business Insurance Protect Airbnb and VRBO Hosts?

A VRBO insurance or Airbnb insurance policy provides coverage for property damage, liability claims, and loss of rental income. Here are some coverages that a host may need:

  • Property damage coverage protects your property from damages caused by fire, water damage, a natural disaster, vandalism, or theft.
  • General liability coverage protects you from third-party claims or lawsuits arising from injuries or damages to your guests while visiting your property. For example, if a guest slips and falls in your rental and sues you for medical expenses, your liability coverage can help cover the costs.
  • Loss of income coverage compensates you for rental income you lose if your property becomes uninhabitable due to a covered peril, such as fire or storm damage.
  • Cyber liability insurance pays for damages or losses resulting from a data breach or cyber-attack that compromises your guests’ confidential information.

What your customized policy should include depends on your specific needs. Speak to a licensed Zensurance broker if you have questions about what coverage and coverage limits to choose and to understand what your policy does and does not cover.

Protecting Your Home, Condo, or Vacation Rental Property

Whether you regularly rent your living space through Airbnb and VRBO, or even if you only do so once, keep your financial security and home safe. 

Let us help you protect your assets with a low-cost Airbnb insurance or VRBO insurance policy. Fill out our online application for a free quote. Through our partner network of more than 50 insurance providers, our friendly brokers can quickly set you up with a customized policy to grow your home-sharing business and your most valuable asset: your home.

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About the Author: Alexandria Anthony

Alexandria Anthony is the Team Lead, Property & Hospitality, at Zensurance.