Understanding Liability Insurance for Your Short-term Rental
As the Chief Insurance Officer of CertiStay, Yvonne Chan is the go-to expert to answer any questions regarding vacation homes and insurance. Yvonne holds impressive qualifications such as Chartered Insurance Professional (CIP), Canadian Risk Management (CRM) and Canadian Association of Insurance Brokers (CAIB) designations. She has been working in the industry for over 20 years and specialises in modelling proprietary insurance solutions.
1. Yvonne, thank you for answering some questions for us today. Could you briefly describe your background in the insurance industry?
Today many young insurance professionals are graduates of a risk management program at post secondary institutions – many of my peers of my generation either fell into insurance by accident or it is a family business. I fell into insurance by accident when I was trying to figure out what to do after school. In my very first insurance job, I met a wonderful mentor who continues to be a mentor and friend to me to this day. She was knowledgeable and kind. However, she was a tough teacher, which I admired and wanted to emulate.
My first job was with The Dominion of Canada Insurance Company, which was the oldest Canadian Insurance company prior to Travelers acquiring it. I was a Claims Assistant before being promoted to an In-house Claims Adjuster, adjusting homeowners’ claims. From there it was a natural progression to learning how to create insurance programs to meet the needs of different insured operations so that when there is a claim that the policy would respond. I went on to become a Placement Specialist with several global insurance brokers to continue to develop my craft. I was extremely fortunate to have many wonderful mentors along the way that encourage my curiosity and passion for the insurance business.
2. What is your role now at CertiStay and what does it encompass?
My title is Chief Insurance Officer. I believe that everyone dreams of having an opportunity to apply what they have learned throughout their career and to implement products to specific business needs.
CertiStay’s business is unique and one of a kind as there is an urgent need to address safety and security of short-term rental properties by an independent third party. The clients that seek us out are therefore savvy and exceptional business operators with specific insurance requirements.
My main role at CertiStay is to create insurance product offerings to address their specific business requirements. Insurance that will stand the test of claims that are unique to this class of insured.
3. Diving right into the topic, what is liability insurance and why should operators insure their short-term rental?
Vacation home owners can be sued at any point in time – whether there is wrongdoing or not. This is a fact. It is also a fact that our society has become more litigious. It takes time and money to defend yourself or your business, whether it is your fault or not. Liability insurance therefore is a financial protection against bodily injury and property damage sustained by others for which you are found liable.
You and your business can attract liability for things that you have done or may not have done. Consider the example of someone tripping down the stairs at your short-term rental. If the injured person tripped over their own feet, you are not in any way at fault. However, if they felt that that the unfortunate accident was due to some faulty treads on your stairs, you can be held liable for their injuries. So at the very least, you as the operator would want the peace of mind to, either be able to pay for the damages or to have the ability to defend yourself against nuisance claims.
4. Do popular short-term rental listing sites like Airbnb or HomeAway include liability insurance? Why would operators consider seeking extra insurance beyond that coverage?
Short-term rentals are not like a hotel or a bed and breakfast. Many operators operate either from their principal residences or have property that is strictly for short-term renting. As a result, insurance programs have to be tailored for these unique business operations.
Some of the larger listing sites do provide some liability coverage for operators or hosts, but generally the limit of coverage is too low for a business operation. Should a serious accident occur – the limit may be insufficient.
Operators should not only seek additional insurance coverage but they should make sure that they have the right coverage. They run a business, and in order to thrive as a business, they must operate profitably and without loss due to liability claims. Therefore, financial protection and the ability to transfer the risk to an insurer should be key considerations of any business operations.
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