In a white paper recently published by ISO, a data and resource provider owned by Verisk Analytics, the company acknowledged risks associated with home-sharing services and said it is currently working on several products to address them.
When developing its Homeowners Program, which insurance companies use as a template for their homeowners insurance policies, ISO did not take home sharing into consideration. Many long-standing rules were in place regarding rentals, but none specifically for short-term rentals facilitated by the numerous technology companies that exist today.
The new products ISO intends to roll out for homeowners insurance companies will help carriers clearly state whether risks associated with home sharing will or will not be covered. One product will also be a form homeowners insurance companies can use if they plan to offer a home-sharing coverage option.
Some homeowners insurance companies, such as Allstate, already offer optional coverage for policyholder who temporarily lease their residence. But many carriers, as well as their policyholders, could stand to benefit from more distinct rules regarding home sharing.
One ISO product in development called the Homeowners Enhanced Home-Sharing Coverage Option is designed to offer broad coverage for home-sharing hosts. The option is meant to fill any potential gaps in the insurance or damage recovery process offered by the home-sharing companies. It might also include an enhanced level of theft coverage, according to the white paper.
Policyholders who temporarily lease their residence are also probably more likely to use a home-sharing service to rent someone else’s, so the enhanced coverage option will protect them in both scenarios.
Steps Regulators Are Taking
While the new ISO products are in development and carriers decide whether they will accept the risks associated with home sharing, state and city governments are regulating the services.
Class A dwellings, which are exclusively for permanent residents, are not permitted to host home-sharing service guests in the state of New York for any period shorter than 30 days. There are some exceptions, but a recent law enabling authorities to fine most listings on services like Airbnb.
It was a significant change in New York because thousands of listing in New York City are affected, where temporarily leasing an apartment can help offset the high cost of living.
Leasing a residence through a home-sharing service for less than 30 days is permitted in San Francisco, as long as the host abides by certain rules. The permanent resident must occupy their home for at least 275 days out of the year and maintain at least $500,000 in liability coverage, either through a home-share service or an independent policy. Hosts also must keep a record of their compliance with those rules for at least two years.
The city of Portland has similar rules to San Francisco and other cities, both in the U.S. and abroad, have considered degrees of regulation.
In states like Florida, there are no laws that address home-sharing services directly, but residents have been fined by local law enforcement agencies for hosting guests and violating local zoning laws, according to The Associated Press.