Avoid long-term pain on your short-term rental

Short-term rentals have gained popularity recently – among travellers looking for “home-away-from-home” accommodations, and among homeowners looking to cash in on their property in a tourist destination.

With the busy summer travel season rolling in, homeowners may be considering this potentially lucrative endeavour, but experts advise doing some research before handing over their keys.

Most Canadians have heard the short-term rental horror story that recently left one Calgary family homeless, after the hard-partying tenants they hosted through Airbnb trashed their home in what Calgary Police called a “drug-induced orgy.” In order to be “livable” again, the house, which was deemed a biohazard, will require months of decontamination and repairs to the tune of (at last count) $150,000, as reported by The Calgary Herald.

These homeowners reportedly have been both guests and hosts using Airbnb in the past, without issue. The popular website has 350,000 hosts and 15 million guests in 190 countries around the world.

While stories like this one are few and far between, they do happen, which is why homeowners looking into the short-term rental business need to make sure their home and property is protected in case of damage.

Airbnb has said it will cover damage from this case of rental-gone-wrong through its Host Guarantee, an insurance policy that covers up to $1 million in damage to an “eligible property.” But where the question of eligibility arises, this could be a costly mistake that your own home insurance policy might not cover.

Steve Kee, spokesperson for the Insurance Bureau of Canada, has one simple piece of advice for homeowners considering cashing in this upcoming summer travel season – understand your home insurance policy.

“Your home insurance policy assumes that you are the resident of the home, with occasional guests,” Kee says. When you hand over your keys, you become a landlord to tenants, even if only for a few days. “There’s a new risk profile that comes with tenants,” Kee says, which means your policy may not protect your home and its contents in case of damage that occurs while they’re staying there.

“You have a policy,” he advises. “Read it. If you still don’t understand it, call your representative and ask.”