13 Jul If we rent out home as Airbnb, what insurance do we need?

Q. We’re considering buying a home for personal vacation use and as an Airbnb. What insurance is necessary as an absentee homeowner?
— Buyer, maybe

A. This sounds like an exciting enterprise.

We’re glad that you want to make sure you and your investment are protected.

For starters, you’d want to take into consideration all the normal risks that homeowner’s insurance would cover – primarily, though not limited to, the structure, liability and belongings, said David Principe, a certified financial planner with SAGEbroadview Wealth Management in Morristown.

For your personal use you’d get this through secondary home or vacation home coverage, he said. But you need to talk to your insurer to see how coverage may or may not work for short-term Airbnb rentals.

“Some may provide this as an endorsement to your personal-use policy, but others would require a separate short-term rental policy,” he said. “Longer-term rentals might require different coverage through a separate landlord policy.”

Principe said that Airbnb offers a product called AirCover for Hosts, which includes a handful of different protections, including both liability and damage protection coverages. Airbnb provides comprehensive information about this product in an FAQ on their website, he said.

Furthermore, Principe said, you should be sure to clarify with the insurance company what sorts of practical protections they require to ensure your coverage will pay out in the event of a claim.

Those questions would include whether you need certain types of monitoring. Would it need to be mechanical in nature, such as an alarm connected to a fire department, or does it require a person to come to the premises, such as a caretaker?

You should also consider your personal umbrella liability coverage to understand what endorsements, if any, would be required to have that coverage extend to this mixed-use property, he said.

“Lastly, I would recommend reviewing your plan with an insurance agent licensed in the state of your planned second home to ensure you’ve got all the details of your specific situation covered,” he said.

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This story was originally published on July 13, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.