Introduction

Homeowners coverage

Commercial insurance

Host guarantee

HomeExchange

Flipkey

Permits and taxes

Cases

Summary

 Introduction

 Over the past few years sharing economies have become quite popular. Uber and Lyft are the forerunners in ride sharing, RelayRides is the forerunner in car sharing, and airbnb is a major home sharing provider. HomeExchange is an exchange provider where the homeowners swap houses for a given timeframe. Flipkey is similar, advertising that it helps travelers find lodgings, and while many locations may be run by property managers, individuals can also provide lodgings for Flipkey users. Similar to ride and car sharing, airbnb, HomeExchange, and Flipkey provide a platform for potential hosts and guests to connect to share or trade living space. A host may provide an entire house or just a room and may stay on premises or may be traveling himself. All payments are made through the hosting platform, and hosts are to provide some basic identification before listing a home. HomeExchange and Flipkey do not even verify information posted by its members. Flipkey clearly states that they do not assume any responsibility for the confirmation of each user′s purported identity. However, there are no background checks of hosts or guests, so users are taking somewhat of a risk.

 Airbnb hosts agree to provide a clean area and some amenities; there are no requirements, just recommendations from airbnb. Hosts list the available space and interested renters make a connection and a reservation. This is very similar to a bed and breakfast, and many B&B owners are raising flags since airbnb providers are not adhering to regulations that B&B providers are required to adhere to. There are zoning regulations and taxes that airbnb hosts are avoiding. Insurance issues also arise.

 Homeowners Coverage

 The standard homeowners policy provides coverage for property of guests while the property is in any residence occupied by an insured or property of others while the property is on the part of the residence premises occupied by the insured. However property of roomers, boarders, and other tenants, unless related to an insured, is not covered. Therefore there is no coverage for property of guests.

 Furnishings of the insured including appliances and carpeting that are in apartments regularly rented or held for rental are covered up to $2,500. Covered causes of loss are the named perils listed in coverage C, excluding theft.

 Liability is always a concern. Medical payments coverage is available to those on the insured location with the permission of the insured or off the insured location if the injury arises out of a condition of the insured location or ways immediately joining it, caused by activities of the insured or residence employees in the course of their duties. Airbnb recommends that hosts clearly specify whether or not the guest may bring other visitors onto the premises. This becomes important if the insured specified that no other parties were to be allowed and the guest invited someone who was injured while on premises, there would be no coverage.

 Coverage does not apply to a business of the insured. The policy defines "business" as a trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis and for which the insured receives more than $2,000 in total compensation for the twelve months preceding the beginning of the policy period. If the insured has received more than $2,000 in a year by hosting visitors, then that is a business. However, an exception exists for the occasional rental or holding for rental of an insured location if the property is used only as a residence. This creates an issue since the homeowners policy is not designed to provide coverage for a B&B, but the exception leaves the policy open for coverage even if the insured is regularly renting out his home as a vacation spot.

 Commercial Insurance

 Coverage for this type of risk is even more complicated when you look at commercial policies. While coverage may be provided by using ISO's Hotels, Motels, and Inns coverage, it equally may not be provided. The form, MS HM 01 07 13, combines elements of the commercial property and commercial general liability programs along with a supplement schedule and endorsement. Eligibility requirements include smaller establishments such as motor lodges with or without pools or beaches; however, apartment hotels and boarding or rooming houses are not eligible. An "apartment hotel" is defined by Merriam-Webster's Online as a hotel containing apartments as well as accommodations for transients. A boarding house is a house where people pay to live and have daily meals, and a rooming house is a house where rooms with furniture are rented to people to live in. While these definitions imply a sense of permanence or a long-term stay, it is not specifically stated. Therefore, it is confusing as to whether or not coverage would actually apply.

 Motels are eligible under a businessowners policy; however, seasonal use, where the property is closed for more than thirty days, is not eligible. Unless the host was constantly renting his property, this would not apply to those who share their homes. Also ineligible are one- or two-family dwellings unless it is a garden apartment where multiple units are grouped within a single area and under common ownership, management, and control. Again, unless the insured is renting a property solely as an apartment for others and not residing there himself, there would be no coverage.

 Under the commercial package policy there is a modification for motels, hotels, motor inns and lodges, and similar risks whose business is principally the providing of lodging accommodations for transients. Again, for an occasional vacation rental or trade, this does not seem to quite fit even though the owner may be required by state regulations to obtain permits, pay fees, and adhere to other requirements the same as commercial properties.

 Host Guarantee

 Airbnb provides what it calls a host guarantee: if the host follows all terms and conditions as specified, the host then becomes eligible for compensation for covered losses as defined. Before collecting, the host must work with the responsible guest in order to resolve the situation. If the situation is not resolved within seven days, then the host may file with airbnb. Filing must be within fourteen days of the guest′s checkout or before the next guest checks in, whichever is earlier. Airbnb recommends filing a police report, and one is required for any payment request that exceeds $300. Photos of the damage being claimed and receipts or other documentation to prove the fair market value or the cost of the items are also required. A signed and sworn proof of loss is required within sixty days after the date of the loss. The host may collect only what has not already been covered by the guest, insurance, a security deposit, or another party. "Covered losses" are defined as physical damage caused by a guest or invitee while staying at the host′s listed accommodation other than what is excluded. This does not replace the host's insurance, and losses caused by storms, fires, and other common causes are not covered unless caused directly by a guest. If a guest sets fire to the living room carpet, that is covered. If the living room carpet is burned in a fire that was caused by lightning, there is no coverage. Covered property is limited, and fine arts, currency, money, bullion, animals, land, vehicles, and watercraft are excluded. Excessive use of utilities such as gas, electric, or water by the guest, are also excluded, as are losses caused by mold, fungus, spores, or mildew regardless of cause. Coverage is for $1 million.

 Booking income loss is covered, which is the loss of income from the booked portion of an accommodation while a host is recovering from a covered loss.

 Airbnb announced that, beginning January 15, 2015, they will provide up to $1 million in liability for hosts providing accommodations for travelers, called Host Protection Insurance. The policy is secondary over the host′s primary policy but does provide coverage if there is no coverage under the host's primary policy. There is a maximum limit of $2 million per location. If travelers are injured on the property during their stay, coverage applies for hosts, homeowners associations, and in some instances, landlords. Intentional acts caused by the host are excluded, as are nonphysical injuries such as slander or emotional distress. Likewise, injuries from mold, bed bugs, drywall, and other such habitat issues are excluded as well. Conditions are similar to the conditions that appear on the standard homeowners form: mitigation of losses, showing damaged property to airbnb representatives, and allowing inspections.

 HomeExchange

 HomeExchange works as a club and charges an annual $120 membership fee. HomeExchange provides no insurance whatsoever; there is no coverage for any damages caused by an exchange resident nor is any liability coverage provided. Exchangers are completely on their own, and while HomeExchange may mediate a dispute, they are not obligated nor do they guarantee to do so.

 Flipkey

 Flipkey provides travelers with some damage insurance that can be purchased separately, and it may be built into the cost of the rental. It is minimal coverage: $1,000 of coverage for $34, $3,000 of coverage for $39.99, and a maximum of $5,000 of coverage for $49. The traveler is the insured and coverage is very basic. Wear and tear, intentional acts, inclement weather or natural disaster, damage in violation of the lease agreement, loss, theft or damage caused by someone other than the insured, and loss to the insured's (traveler's) property are excluded.

 Flipkey also provides a Peace of Mind policy that provides $10,000 of coverage, provided the payment is sent to the supplier via Flipkey Payments. The renter cannot recover funds from the supplier, bank, or credit card issuer; and the claim must be submitted via email on the check-in date of the rental with all documentation. This does not give a traveler much time to try to recoup funds and make a claim. Coverage is only for lost funds, inaccessible or misrepresented listing, or a deposit dispute.

 Permits and Taxes

 Many jurisdictions have requirements for rental premises, including hotels, inns, B&Bs, and other part-time rental premises; these regulations often vary by city or county and are not just state regulations. Regulations cover items such as length of rental, zoning, fire safety, health standards, taxes, fees, and permits. Homeowner or condominium associations may have regulations against subletting, and neighbors may have concerns. Subsidized housing and rent controlled areas may also have particular rules that apply. Some areas have specific building codes and land requirements, others require licenses for both operating a business and a hotel or similar company, others require rental registrations and lodging house licenses. The requirements are many and varied. Airbnb provides a listing of several area restrictions, but it is up to the host to be sure he abides by all local regulations.

 Cases

 While these companies are relatively new, there have already been lawsuits and more are pending.

In City of New York, v. Smart Apartments LLC., 959 N.Y.S. 890 (2013), the court ruled that Smart Apartments actions of advertising and providing rentals for less than thirty days violated consumer protection law and was a public nuisance and issued a preliminary injunction enjoining them from operating. The plaintiffs claimed that the actions were illegal, unsafe, a deceptive business practice, a public nuisance, and annoyed the neighbors. The defendants did not deny their actions, claimed that some situations actually were legal and that they were changing their ways, and that they were similar to airbnb, who was not being harassed since the mayor was attached to a company invested in airbnb.

 A different case raised a huge issue: travelers refusing to leave. A woman rented her condo to someone for a month, and the traveler refused to leave. The owner hired a lawyer and started the eviction process which can take three to six months. According to California law, once a person rents a property for thirty days, they are considered a tenant on a month-to-month lease. Not only that, California requires owners to provide a relocation fee to tenants they wish to evict. Airbnb and other providers state that renters or hosts are responsible for knowing their states regulations. While the tenant eventually left on his own and airbnb eventually provided assistance and paid for the time the space was rented, the situation highlights what can go wrong.

 Summary

 Sharing economies—including ride sharing, car sharing, and home sharing—has rapidly become popular throughout society on an international level.

 While similar to taxis, limousines, and rental car services, there are many differences that set them apart. The rides and vehicles are provided by any interested person who has passed the company's specifications as to driving history, background, maintenance of the vehicle, and other parameters. As outlined, insurance issues are some of the largest and most pressing issues. Various court cases are under way, and how those will be settled will be significant.