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Rental Property Insurance in Ontario for Owners Looking to Purchase an Airbnb Property

Rental Property Insurance in Ontario for Owners Looking to Purchase an Airbnb Property

February, 9 2022

Airbnb’s platform went live in 2008. Today, there are over 4 million hosts on Airbnb worldwide. Airbnb stands for air bed and breakfast, and a lot of Ontario residents are finding it is a great way to pull in a few extra bucks.

While being an Airbnb or other short-term rental host is a side-gig for many people, this type of venture comes with risks. For that reason, hosts need to view it as a legitimate business and obey laws, pay taxes, and acquire the proper insurance in the proper amount.

What Risks Do Airbnbs Present for Hosts?


As an Airbnb host or hostess, strangers will be visiting your home or another dwelling regularly. The risks are much different than having family members or friends you know well staying overnight in your home.

Even if you have done your due diligence in pre-screening your guests, there is no way to know how they will behave once they pay their money and close the door. Many of your guests will be tidy and respectful, but there is always a chance that one of your guests will want to let loose while on vacation and do something that makes you liable for an illness, injury, or property damage.

What kinds of risk might hosts be liable for?

  • Theft
  • A guest gets injured
  • A guest becomes ill
  • A guest accidentally damages your property
  • A guest damages a neighbor’s property

You want your guests to feel at home but be aware some guests behave differently when they are away from home. They may be a little more carefree and willing to throw caution to the wind.

Regardless of how things turn out, the right short-term rental insurance policy will protect you against personal liability and reduce your out-of-pocket expenses.


Are Airbnb Hosts Required To Carry Insurance for Short-Term Rentals?

As of today, Airbnb and short-term rental hosts in Ontario are not legally required to carry insurance for their rentals.

Nonetheless, regulations for Airbnb listings and other short-term rentals have been evolving to provide safety for the hosts and the tenants. Because of events of violence at Airbnbs, several cities in Canada are developing new regulations for Airbnb hosts, including Calgary, Saskatoon, Oakville, Ottawa, and Toronto.

While the current laws do not require hosts to acquire liability insurance, the regulations could change at any time. Airbnb hosts need to stay updated on changes in regulations.

For hosts who own a home with a mortgage and rent a room on Airbnb, the mortgage company will require them to have a home insurance policy in place. However, mortgages companies do not require hosts to have policies that include coverage for Airbnb rentals.

Does My Homeowners Insurance Qualify as Short-Term Rental Insurance?

Homeowners’ insurance policies are very wordy and filled with legal language, making them difficult for some people to comprehend. Depending on your insurance policy, you may or may not have coverage under your homeowners insurance policy.

Some home insurance policies have a rental exclusion contained in the wording which means they will deny a claim if you become liable because of one of your guest’s acts. This type of situation could cause a large out-of-pocket expense for you.

Insurance providers for homeowners have also caught on to the popularity of Airbnb rentals. Some of them are now offering a home-sharing endorsement to provide coverage for hosts. Be aware that such endorsements are limited in types and amounts of coverage, and they may not offer sufficient coverage to pay for a loss.

Some endorsements also only cover the primary residence of the residence premises and exclude coverage for secondary investment properties.

Can I Rely on Airbnb’s Insurance for Home Insurance in Ontario?

Airbnb offers Host liability insurance for hosts. The program is only available in certain countries, and Canada is one of them. The policy covers incidents that cause liability for the host as a result of a bodily injury or property damage claim up to $1 million that arises from a guest’s stay.

While Airbnb’s rental property insurance is convenient, it carries many exclusions, including theft. It does not cover hosts for damage to their own property or accommodation, and it only covers while hosting guests. Many hosts regularly request a security deposit to cover any damage the guests do.

Because of the many exclusions, it is recommended that hosts carry additional commercial insurance coverage or have an endorsement added to their home insurance policy.

Airbnb hosts should also be aware that their Host liability program is secondary to other forms of insurance such as your home, rental property, and umbrella insurance policies.

What Kind of Protection Do I Need for Short-Term Rental Insurance in Ontario?

To get the proper home insurance in Ontario, hosts should consider their rental a business venture and protect it with the right commercial insurance coverages.

The following types of insurance coverages will give you peace of mind:

  • Commercial General Liability – Protects against claims by guests of bodily injury or property damage. This coverage includes legal fees and medical expenses.
  • Commercial Property Insurance – Protects against physical damage or loss to your property and contents in the event of an external disaster such as theft, fire, or vandalism.
  • Rental Income – Provides you with rental income in the event of damage by water, fire, or other insured perils.
  • Loss Assessment – Pays for losses above HOA insurance policies for condominiums or other shared properties.
  • Cyber Liability Insurance – Provides coverage for cybercrimes that involve your technology systems and customer data. It pays for notification costs, legal expenses, and risk management fees.

Commercial rental property insurance in Ontario will also provide replacement cost valuation, which means there will be no depreciation for property. Moreover, commercial policies generally do not have a limit for property damage, theft, or vandalism by guests.

Liability usually extends to areas that are the most prone to risks, such as swimming pools, hot tubs, and fitness rooms, and liquor liability may also be covered.

Overall, a commercial rental property insurance policy affords much greater coverage than Airbnb’s Host liability policy or your home insurance policy.

Final Thoughts

Being an Airbnb host is a lucrative opportunity that can bring you in extra income. As you set up your account, you should realize you will have risks and business expenses, and they go hand-in-hand with rental property insurance in Ontario.

To learn more about short-term rental insurance and all your other insurance needs, contact Duliban Insurance at 855-DULIBAN.



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