Category Archives: Insurance

15 Risk Mitigation Tips for Airbnb Hosts

Posted on July 5, 2016 by Marijana Dabic

Property owners have a unique opportunity to efficiently rent out their entire home, a spare bedroom or other accommodation through the online service known as Airbnb. For travellers, Airbnb is a convenient, web-based platform that provides affordable and flexible alternatives to hotels. For property owners, the tool easily connects various rental units with prospective occupants and makes collecting payments simple and secure.

Despite its convenience and the potential for profit, Airbnb is not without its risks for those who decide to list. Before renting out your home or spare room through Airbnb, keep in mind the following tips:

1. Acquire the proper insurance.

Proper insurance is key to mitigating the risks associated with Airbnb. Take the time to review your renters or homeowners policy with ALIGNED Insurance Inc. to make sure you have adequate coverage in place.

2. Complete a home safety inspection.

Safety inspections can help Airbnb hosts address risks before they balloon into bigger issues. Before listing your property on Airbnb, complete a thorough home inspection and address all of the safety hazards you identify.

3. Screen all guests.

Prior to allowing guests to stay in your home, it’s a good idea to check their background. To begin, ensure that prospective guests are verified through Airbnb. You can also review any connected social media accounts and read guest references through the site. Above all, trust your instincts.

4. Set clear rules.

Through Airbnb, you can create guidelines for guests by completing the House Rules, Home Safety Card and House Manual sections of your profile. This allows you to set clear rules for guests around etiquette and safety.

5. Establish occupancy limits.

Limiting the number of occupants that can use your property will help ensure that guests are comfortable and safe during their stay. Occupancy limits should take into account the size of the property and local regulations.

6. Add a security deposit.

Adding a security deposit to your Airbnb listings can lessen the financial blow in the event of damaged property or another incident.

7. Secure your valuables.

When you open your home to guests, there’s the potential that valuables could be damaged or stolen. To protect expensive items, consider moving them into a safety deposit box or to a secure off-site location.

8. Protect sensitive information.

Your property isn’t the only thing you need to worry about when inviting guests into your home. To help prevent identity theft, make sure that guests cannot gain access to any files (physical or electronic) that contain sensitive personal information.

9. Install smoke and carbon monoxide detectors.

Safety equipment like smoke and carbon monoxide detectors should be installed around the premises to protect guests and your property. Emergency exits should be properly labelled as well.

10. Child-proof your premises.

It’s likely that some of your guests will have children. To protect younger guests, take the time to properly child-proof your home.

11. Keep your accommodations maintained.

Good housekeeping can help guests avoid common injuries such as slips and falls. Prior to each stay, examine your home for any new housekeeping issues that must be addressed.

12. Provide contact information.

Always supply your guests with information sheets that indicate local emergency numbers and the nearest hospital. Provide a clear emergency contact number for yourself, as well as backup, for easy guest reference. Also make clear how you should be contacted if the guest has questions or issues arise.

13. Supply a first-aid kit.

In addition to providing emergency contact information, having a first-aid kit readily available and fully stocked at all times is important to guest safety.

14. Verity compliance with regulations.

Regulations around Airbnb hosting can differ depending on your location and the type of accommodation you are renting out. Double-check that you are compliant with local and provincial laws before using Airbnb.

15. Notify those who could be impacted by your guests.

When you host guests through Airbnb, there is the potential that neighbours or roommates could be impacted. To avoid unnecessary conflict, let your neighbours or roommates know ahead of time that guests will be using your property.

4 Tips for Avoiding Kidnappings Abroad

Posted on June 29, 2016 by Marijana Dabic

Canadian John Ridsdel was kidnapped by a terrorist organization and held for ransom while visiting a resort island in the Philippines in September of 2015. In April of 2016, Ridsdel was killed by his captors. A retired executive, Ridsdel was an avid traveller and knew the region he was visiting well—proof that kidnappings abroad can happen anywhere and to anyone.

This tragic incident helps illustrate just how important it is for businesses that allow their employees to travel abroad for work to protect those workers. The following are four tips employers should share with their employees to ensure safety abroad:

Be aware. Most kidnappings can be avoided if the employee is aware of his or her surroundings. Having a deep understanding of the culture and how you may be perceived can go a long way toward avoiding dangerous situations. Ensure that your employees understand how to properly conduct themselves in public.
Transportation. Ensure that you have provided approved transportation to your employees. Never provide transportation you are unsure of, as this can be dangerous. Employees should also be advised to avoid spontaneous trips to unfamiliar areas.
Vary your schedule. Sticking to a daily routine is good for planning, but it can make an employee an easier target for kidnappers. For long-term trips, instruct employees to change up their routes to and from their hotels as possible.
Be wary of the local authorities. Abroad, the local police can be an invaluable resource to your employees in the event of an emergency. However, they can sometimes be just as dangerous as the kidnappers themselves. In fact, in some foreign countries, local police may do the kidnapping themselves or play a role in helping kidnappers capture unexpected travellers.

To further protect employees, businesses should consider purchasing a kidnap and ransom insurance policy. This type of coverage is a stand-alone policy designed for those businesses whose employees travel internationally, and it covers costs related to kidnapping, ransom, wrongful detention, extortion and hijacking.

Pollution Liability Insurance

Posted on May 27, 2016 by Marijana Dabic

Pollution and environmental conditions are growing exposures for many businesses, exposures that are not covered under standard insurance policies. A steadily increasing focus on the environment paired with an expanding list of known pollution sources have led to many recent costly law suits that companies never saw coming. Due to the unknown nature of many environmental conditions, a pollution claim can arise at any time, for nearly any type of company, and the cost could prove devastating.

Luckily, pollution insurance is available as a separate policy to protect companies from the risk of environmental conditions and cover the many potential costs of those exposures.

History of Pollution Insurance

Environmental insurance products date back to the mid- to late-1980s, and have evolved since then to keep pace with changing trends, new exposures and greater coverage needs. The first policies, known as pollution legal liability insurance, covered third-party bodily injury, property damage and cleanup cost claims that resulted from the offsite release of environmental contaminants from the insured’s property. These policies, though better than nothing, had obvious shortcomings: they didn’t cover any claims resulting in on-site contamination, and they didn’t cover any first-party cleanup costs.

The early 1990s brought expansions to pollution policies as they began to cover claims for on-site contaminant releases and claims for first-party cleanup costs due to a newly discovered environmental condition. Most carriers did limit this first-party coverage to cleanup costs that the site owner was legally obligated to pay, such as staying in compliance with local, provincial or federal standards.

In addition, newer pollution policies cover site owners for the entire lifespan of a property—from “cradle to grave” (as long as the owner has coverage throughout this entire period). This lifespan begins when the property is acquired, lasts throughout its useful purpose and ends when the property is abandoned or sold—because the property owner could be liable for environmental exposures during any phase of the property’s lifespan.

Many of the recent pollution policies also include previously known exposures, such as asbestos, lead-based paint or specific contaminant levels that were previously below legal standards. Such known exposures used to be widely excluded.

Pollution Policies Today

Currently, there are several types of pollution coverage available, and most policies are customizable to fit a company’s unique risks and exposures. They often offer ancillary coverage options too, such as contamination during the transportation of goods.

Who is Covered?

Traditional pollution policies covered only the site owner, but today, many parties could be liable for environmental conditions. During the sale of a property, both the seller and purchaser could have potential liability. They could address this shared liability somehow in their contractual arrangements, but both could protect themselves with a type of pollution coverage.

Lenders whose loans are backed up by actual real estate also face a potential liability if they foreclose on a property and then an environmental condition is discovered. Not only will this make the value of the property plummet, but the lender would then be responsible for the costs of the pollution. Lender liability coverage was created to protect lenders from this unique environmental risk.

The tenant of a property, whether the owner or renter, also faces liability for pollution claims, particularly if their business operations or personnel caused the pollution.

Why Purchase Pollution Insurance?

The risk of pollution may seem obscure, but it is one that could arise at any time. New forms of pollution and contamination are frequently being discovered, often with the result of a large (and generally successful) lawsuit due to third-party bodily injury or property damage.

In addition, due to the widely variable and uncertain nature of environmental and pollution factors, this risk is an economically uncertain liability—but one that could be financially disastrous. Costs could exceed even the value of the property itself. Many risk managers feel more comfortable paying a fixed amount in premium than gambling with potentially catastrophic costs in the future.

Potential costs are so high because there are many aspects to pollution exposures. For instance, a third-party claim could include bodily injury, property damage and/or hefty cleanup costs, both for contaminants that travelled off-site or were released onsite. Plus, the company would be responsible for the court costs associated with defending itself. A first-party situation arises when a company experiences a spill or contamination situation that that requires cleanup, often due to a violation of local, provincial or federal environmental standards. In both of these instances, business interruption is also a consideration, as any cleanup could be time-consuming as well. Pollution insurance can cover all of those exposures.

In addition, pollution insurance can help a property transaction go quicker. If an environmental condition exists prior to or during the sale of a property, the process can be dragged out while the condition is cleaned up. Even if no known condition exists, environmental tests and investigations to find potential pollution sources can be lengthy. A pollution insurance policy can help the sale move because the buyer knows an existing environmental condition would be taken care of, without needing to hold off the sale until that point.

Pollution policies tend to be flexible, making it easier for businesses to tailor their coverage to fit their company’s particular exposures. The experts at ALIGNED Insurance Inc. can help you find the right policy for your company.

What Qualifies as a Pollution Source?

There are countless possible pollutants, environmental conditions and contaminants in any building or property, and more could be discovered at any time. Many claims that insurance companies classify as pollution-related are ones that you may think would be covered under your commercial general liability (CGL) policy. Due to the sweeping pollution exclusion on these standard policies, you may find yourself surprised when a claim is classified as pollution and not covered.

The following are just a sampling of possible pollution exposures that may affect your company:

Chinese drywall (defective drywall containing unsafe levels of sulphur that has been released into the air)
Toxic mould, fungus or other bacterial contamination
Silt runoff from construction sites into public water sources (liability for both contractor and property owner)
Certain green construction techniques that can cause unforeseen pollutants
Nanotechnology
Asbestos
Lead-based paint
Any contaminants or chemicals that could be released into the air or public water supply (this list could be endless, including solvents, degreasers, paints, cleaning products, fuels, pesticides, herbicides, etc.)
Aboveground or underground storage tanks
Improper waste disposal (including medical waste)
Building or car exhaust/fumes
Malfunctioning of HVAC or ventilation equipment
Malfunctioning, crumbling or leaking of older buildings and pipes, causing contamination

Conclusion

Pollution is an unpredictable, costly exposure that your business needs to consider as part of its risk management program. While a lot of pollution-related incidents can be prevented, there is always the possibility for an unexpected spill, contamination or environmental condition to occur or surface. That is why pollution insurance is absolutely vital to protect your company.

Common Exposures All Airbnb Hosts Should Consider

Posted on May 13, 2016 by Marijana Dabic

In today’s technologically advanced world, individuals have a unique opportunity to efficiently rent out their home, spare bedroom or other accommodations through Airbnb, an online hospitality company.

For travellers, Airbnb is a convenient platform that provides affordable and flexible alternatives to hotels. For property owners and tenants, the service easily connects various rental units with perspective occupants and makes collecting payments simple and secure. For the average homeowner, properties or spare rooms that are otherwise vacant can easily be transformed into a source of income.

Despite its convenience and the potential for profit, Airbnb is not without its risks for those who decide to list accommodations.

Potential Insurance Gaps

If you are considering renting your property through Airbnb, your first step should be to contact your insurance broker to review your current homeowners or renters insurance policy. Relying strictly on such policies while hosting guests through Airbnb can lead to significant gaps in coverage and leave you financially vulnerable.

While your homeowners or renters policy may allow you to rent your property to a guest, it is important to keep in mind that each insurer has their own restrictions and requirements. For example, some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to broaden your coverage.

Standard homeowners and renters insurance policies are designed for personal risks, not commercial use. If you plan to rent out your residence on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy to be properly insured. It should be noted that a growing number of insurance companies now offer home-sharing liability insurance policies that can be purchased on a month-to-month basis.

Even more alarming, your homeowners or renters policy most likely won’t consider damage to your property caused by guests a covered peril. This means you could be left to cover the cost of property damage caused by Airbnb guests.

Issues with Airbnb Provided Protection

To their credit, Airbnb does offer its hosts two forms of protection through their Host Guarantee and Host Protection Insurance. While hosts may be inclined to rely exclusively on these programs to manage their risks, there are significant gaps related to these offerings.

Host Guarantee

Airbnb backs every one of its bookings with its Host Guarantee program at no cost. Airbnb claims that this program will reimburse eligible hosts for damages up to $1,000,000. However, Airbnb readily admits that its Host Guarantee is not insurance and should not be considered a replacement or stand-in for homeowners or renters insurance.

Moreover, payments through the Host Guarantee are subject to a lengthy list of terms, conditions and exclusions. Therefore, hosts should be aware of the following issues related to Airbnb’s Host Guarantee:

Hosts must attempt to resolve any issues with the guests involved prior to receiving any compensation. This also means that a host would have to make a claim on their own insurance policy before Airbnb would intervene.
Any sum collected from a standard policy or a security deposit would be deducted from the Host Guarantee.
The guarantee will only repair or replace covered property that is damaged during the timeframe of an online booking.
This guarantee does not cover certain items including, but not limited to, cash, collectibles, jewellery, pets, watercraft or any damage to property that is not considered a covered accommodation.Host Protection Insurance
In addition to its Host Guarantee, Airbnb offers coverage to its patrons through its Host Protection Insurance. Airbnb indicates that the program provides primary liability coverage for up to $1,000,000 per occurrence in the event of third-party claims of bodily injury or property damage. Despite Airbnb’s claims, hosts should be wary of relying solely on this insurance program for a number of reasons:
For more information on specific elements of Airbnb’s Host Guarantee, hosts can review its terms and conditions in full here.

Host Protection Insurance

In addition to its Host Guarantee, Airbnb offers coverage to its patrons through its Host Protection Insurance. Airbnb indicates that the program provides primary liability coverage for up to $1,000,000 per occurrence in the event of third-party claims of bodily injury or property damage. Despite Airbnb’s claims, hosts should be wary of relying solely on this insurance program for a number of reasons:

Intentional acts that aren’t the result of an accident are not covered under this policy. In addition, Airbnb’s Home Protection Insurance does not cover what they refer to as property issues, which can include things like mould, asbestos and bedbugs.
Neither Airbnb’s Home Protection Insurance nor its fine print is readily available for review. What’s more, the policy is subject to limitations, conditions and exclusions. Together, this means that specifics around coverages are vague, and Airbnb hosts may not know what’s protected.
The personal property of any guest is generally not covered. Additionally, any theft or damage caused by a guest may not be covered either.
With Airbnb’s Host Protection Insurance, it’s best to assume that you aren’t equipped with the proper coverage. For full protection, it is likely that you will need to speak with an insurance professional to better understand the policy adjustments you will need in order to be fully covered.

Considerations for Condo Owners and Renters

While Airbnb opens its services to condo owners and renters, multi-unit buildings often have restrictive bylaws, homeowner association rules or lease terms that could impact one’s ability to host guests through Airbnb.

In many instances, commercial activities like renting out accommodations—even for short period of time—are forbidden by lease or condo board policies. In some cases, hosts will need to contact their landlord or condo board before subletting or renting any accommodations out. Failure to do this can result in eviction or other forms of legal action.

Even if you are allowed to rent out your condo or apartment through Airbnb, hosts should be aware that doing so can cause tension with neighbours. There’s the potential that your guests may not be respectful to property in common areas, act inappropriately or noisily, or make other tenants feel uncomfortable.

Local and Provincial Laws Considerations

In response to the rising popularity of Airbnb, many provinces, cities and towns are moving to regulate short-term property rentals through their municipal codes or zoning regulations. In some cases, home rental services like Airbnb could be prohibited altogether.

If you break these local regulations, purposely or otherwise, you could face thousands of dollars in fines. What’s more, Airbnb says alignment with laws and regulations is the responsibility of those renting out accommodations. Accordingly, it is imperative to review local laws and regulations before you commit to using Airbnb to rent out accommodations.

Tax Considerations

Income from all sources is taxable in Canada, including internet-sourced rental income. Consequently, any income derived from Airbnb rentals must be reported to the Canadian Revenue Agency (CRA).

Depending on number and nature of the services provided to guests, the CRA will consider money earned through Airbnb either rental or business income. Furthermore, if the income you make from Airbnb exceeds $30,000 per year, you will most likely have to register for a harmonized sales tax (HST)/goods and services tax (GST) account through the CRA and will be subject to the applicable taxes. Provincial sales taxes (PST) will vary from province to province.

For those who have already earned unfiled income through Airbnb, coming forward through Canada’s Voluntary Disclosures Program (VDP) is recommended. Through the VDP, penalties for unfiled back taxes will be forgiven.

For more information on the tax implications of Airbnb and to ensure compliance, hosts are encouraged to contact a tax professional or the CRA.

The Bottom Line

While Airbnb offers a unique and potentially profitable service to users, it’s not without its faults. Before you decide to try it for yourself, be sure to consider all of the risks.

Again, you’ll want to minimize potential financial fallout by purchasing the appropriate insurance coverage. To discuss your options further, have your insurance broker contact ABEX today.

Protecting Vacant Property

Posted on April 21, 2016 by Marijana Dabic

In the event of a mass lay off or foreclosure, your firm may be forced to manage vacant property. The insurance risks and liabilities associated with owning unoccupied property can be extensive. To ensure you are adequately protected, it is important to know your risks. In addition to purchasing comprehensive insurance coverage, there are numerous preventive strategies for maintaining vacant property to reduce risk and liability.

Potential Risks

There are a host of risks and concerns associated with owning vacant property. Vacant buildings are an obvious target for theft, trespassing and vandalism. In addition to any loss or property damage that may occur, keep in mind that the owner of a property can be held liable for criminal activities or accidents that take place on the premises.

In addition, vacant properties are susceptible to undetected damages, such as fire, water damage, electrical explosions, wind or hail damage and mould. Many of these incidents occur in vacant buildings due to small, undetected maintenance issues (where someone in an occupied building would have recognized and handled the problem before it caused a larger loss).

In certain facilities, there may also be environmental hazards that the owner needs to consider. Facilities that are used to store chemicals or other pollutants should ensure that such materials are removed or securely stored—the owner may be held liable for any hazardous materials that contaminate groundwater or other nearby natural resources. Also, underground fuel tanks present serious challenges and should be frequently and carefully inspected by professionals.

Other Ways to Mitigate Risk

In addition to extending coverage, there are some simple steps that owners of vacant property can take to limit their risk and liability.

Prevent vandalism – Notify local authorities of vacated properties so they can watch for criminal behaviour. Maintain an “occupied” appearance to the property—mow the lawn, have mail forwarded or picked up regularly and install light timers and/or a security system.
Limit liability – Make sure property is free from significant hazards (broken railings or steps, broken windows, etc.) that could cause injuries to anyone on the property—this could include police officers, maintenance workers, firefighters or even trespassers.
Avoid damage – Performing regular maintenance on the property can decrease the odds of damage. Make sure the heating system and chimney are cleaned and inspected regularly. Have the plumbing system winterized to prevent frozen pipes. Periodically inspect the roof, insulation, attic, basement, gutters and other areas of the house for any necessary repairs, mould, damage or other problems. Consider installing smoke detectors that are tied to a centrally monitored fire alarm system so the fire department will be notified in case of an alarm. Remove all access material and combustibles from in and around the building.

Insuring Residential Properties

Insurance companies sometimes include a clause that the homeowners insurance will expire if a home is left vacant for more than 30 or 60 days (depending on the policy). This leaves the property owner financially vulnerable for all the risks previously noted. However, many insurance companies do offer vacant property insurance (also known as vacant building insurance or vacant dwelling insurance).

Unoccupied Commercial Building Insurance

Vacant commercial buildings are more difficult to insure because they present greater risks, including increased chance of theft, malicious damage and burst pipes. It is important to disclose all relevant facts when seeking insurance, including the reason for the property’s vacancy and a schedule of any works to be done on the property.

Because of the increased risks and liability associated with a vacant property, these types of insurance tend to be costly—ranging from one and a half to five times the cost of a property insurance policy. It is important, though, to look beyond the price and consider the suitability and comprehensiveness of the coverage being purchased.

Category Archives: Insurance

15 Risk Mitigation Tips for Airbnb Hosts

4 Tips for Avoiding Kidnappings Abroad

Pollution Liability Insurance

Common Exposures All Airbnb Hosts Should Consider

Protecting Vacant Property

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