With the rise of short-term rental platforms like Airbnb and Vrbo, many homeowners within associations (HOAs and COAs) are considering renting out their homes for extra income. However, one common question that arises is: Will short-term rentals affect our Homeowners Association’s Master Insurance Policy?
The Short-Term Rental Dilemma for HOAs
Short-term rentals are becoming an increasing concern for homeowners associations and condominium associations. While having just one short-term rental property out of 50 homes in an HOA community may not significantly impact the master policy, a higher percentage of rentals can create challenges.
How Does This Affect HOA Insurance?
Short-term rentals do not directly alter the coverage or protection offered to the association itself. However, they do impact the availability of insurance providers willing to cover the community. Many insurance companies view short-term rentals as higher-risk properties due to frequent guest turnover and potential liability issues.
From our experience, when short-term rental properties make up more than 10% of a community’s total units, insurance options become more limited, and premiums may increase. This percentage threshold can change at any time, depending on the insurance market.
The Response from Homeowners Associations
Recognizing the potential risks and insurance challenges, many associations across the state have amended their bylaws to prohibit short-term rentals altogether. These amendments are designed to:
- Protect the stability and character of the community
- Prevent increased wear and tear on common areas
- Reduce liability concerns that could arise from transient guests
- Maintain broader and more affordable insurance options for the association
What Homeowners Should Consider
If you’re thinking about listing your home as a short-term rental, check with your HOA or COA before proceeding. Review the governing documents, including bylaws and any rental restrictions. Additionally, be aware of local regulations, as some municipalities have also enacted short-term rental ordinances.
Final Thoughts
While short-term rentals can be a lucrative opportunity for homeowners, they come with potential consequences for the broader community. Homeowners associations need to carefully evaluate the impact on insurance coverage, community safety, and long-term stability before deciding how to handle short-term rentals.
If your HOA is navigating this issue, consider consulting with your insurance provider to understand how short-term rentals could affect your master policy. Staying proactive will help maintain the integrity and financial health of your community.
It pays to use an insurance agent experienced in all the exposures of a community association. State requirements and laws change frequently and with all the necessary policies required to protect against the various exposures to adequately protect the Association, the Managers, Directors, Officers and Members including their professional actions while acting for the Association it demands special attention, knowledge and access to the proper insurance companies that participate in this specialized space.
Harris Insurance Services has been in the business of protecting Florida Community Associations since 1965. We would be happy to assist any Property manager or Association officer in the identification of needed protection and provide a comprehensive cost analysis prior to your next renewal.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
