Does Traditional Homeowners Insurance Cover Airbnb Rentals?

An Airbnb host greets guests at her home in Oregon. Airbnb

When I was a kid, nothing was more fun than a road trip and an overnight stay in a hotel. But things have changed — big time. Today's travelers are skipping hotels and opting for more personal stays in Airbnbs. The home sharing service reports that more than 200 million people have used its service since 2008 — 80 million of those in 2016 alone.

And it's not just those doing the traveling that favor home sharing to hotels. Millennials in particular — 85 percent in fact — support the idea of renting out extra space to people visiting their cities.

But how do you protect yourself if you rent a second home — or even part of your primary home — for extra income? Does a standard homeowners insurance policy cut it?

What Is Home Sharing?

In a nutshell, home sharing is how you — the "host" — can rent your property via a website or app like Airbnb or HomeAway. Potential guests simply log on, find your home, and reserve and pay just like at a hotel. The main difference is your place isn't licensed or regulated like a hotel or bed and breakfast.

That's a problem, though, because it puts you at risk. If a renter damages or vandalizes your property, you could wind up paying to have it fixed, or even for problems they might cause to common areas — like at the pool of your condo building. And if your guests are injured, you could even be responsible for their medical bills.

Protecting Yourself

Your first step should be to talk to your insurance agent and tell them you're home-sharing. They may suggest you purchase a landlord policy that covers the structure, any property inside (including your appliances and furnishings), lost rental income in case of damage, legal fees and liability claims. (Airbnb offers its own Host Protection Insurance program.)

That's because your standard homeowners insurance policy likely doesn't cover short-term rentals. And, even if it does, your insurance company still could deny a claim. Once someone pays you to stay in your home, it technically becomes a business. And homeowners and renters insurance policies typically aren't intended to cover "commercial" use.

Costs for this type of insurance will vary based on your property's size, its location and features, as well what type of coverage you want. While you could rent only to people who will agree to use their own insurance policies, that would probably cut down your pool of renters significantly. And isn't the whole point of becoming a "host" to make money?