With summer fast approaching and COVID-19 restrictions being lifted, a wave of students and tourists is expected to hit Canada soon – and the demand for short-term rentals is also projected to increase.
But as demand for short-term rentals rises, so does the need for insurance for such rental properties. Canadian managing general agent (MGA) CHES Special Risk has already observed an increase in short-term rental insurance in the past month from vacation homes, student rentals, and Airbnb hosted properties.
“In today's ever-changing corporate environment, short-term rentals are no longer a novel concept,” said CHES Special Risk president and CEO Gary Hirst. “Property owners supplement their income by renting out a portion of their home, while students, travelers, and short-term rental seekers find a low-cost stay using online rental apps like Airbnb and Vrbo, and we are ready to help them with our specialized solutions.”
Short-term rental properties pose unique risks, and standard homeowners’ policies will not be enough to cover for hosts, Hirst explained.
“In reality, both regular homeowners' insurance and insurance provided through internet sites such as Airbnb may have unanticipated coverage gaps and holes, exposing property owners to all kind of financial liabilities,” he said. “As a result, it is important as an MGA to raise awareness that condo and homeowners' insurance policies are not often designed to cover business use, leaving owners susceptible.”
There is also the matter of increasing regulation in the short-term rental space, which necessitates insurance coverage. In recent weeks, communities in Quebec and Ontario have implemented stricter guidelines on short-term rental ownership. For instance, Toronto Star reported that the municipality of East Ferris, ON is now requiring short-term rental hosts to have proof of commercial liability insurance worth at least $2 million.
CHES offers short-term rental insurance, with liability limits up to $5,000,000. In addition to the coverage, the MGA can also provide comprehensive buildings and contents package insurance, which includes coverage for fixtures and fittings, liability, as well as loss of rental income coverage.
