(March 2022)
In 2017, Insurance Services Office, Inc. (ISO) introduced several
forms to address an emerged exposure from the sharing economy: home rental to
travelers via 3rd party hosting platforms such as Airbnb, HomeAway
or Roomorama. The forms were necessitated by the popularity of formal networks (referred
to as home-sharing or peer-to-peer rentals) that facilitated the rental or
mutual exchange of residences for, primarily, recreational purpose but,
increasingly, for profit. ISO homeowner forms had long contemplated absorbing
the exposure of having an insured occasionally renting or mutually exchanging
use of residences. The establishment of national, even global, networks has
created larger, more complicated risks for residential insurers. Considerations
for this exposure were directly incorporated into the base forms with the
introduction of the ISO HO 2022 Program. (03 22 Change)
The optional forms contain a home-sharing Host Activities
Damage to Property of Others schedule. It permits space to choose and enter a
per occurrence limit of liability for that protection option. It fills a
valuable need for policyholders who have various levels of commitment to making
their residences available to others seeking vacation and leisure spaces.
OPTIONAL FORMS
For use
with the HO 00 02 Policy
For use
with the HO 00 03 Policy
For use
with the HO 00 04 Policy
For use
with the HO 00 05 Policy
For use
with the HO 00 06 Policy
For use
with the HO 00 08 Policy
The optional forms modify the various base home policies by
adding several new definitions. The new terms are “Home-sharing host
activities,” “Home-sharing network platform,” and “Home-sharing occupant.”
Home-sharing host activities—refers
to making the location deemed by the applicable policy as a residence premises
available to others through renting or via an exchange. Any services or
property provided that are connected to the rental or exchange of the defined
premises also qualify as an activity under this term.
Home-sharing network platform—refers to any electronic channel designed for transacting property
rentals, complete with compensation for that service.
Home-sharing occupant—any
person who has agreed to rent and compensate an insured for renting property
via a home-sharing network, including a person accompanying a renter.
Next, the forms make a change to the definition of
“business.” The optional forms add the defined term “home-sharing host
activities” as a business activity. Further, the endorsement adds a new section
C which clarifies that a “home-sharing occupant” is a unique party. A person
designated as such is excluded from consideration as a boarder, guest, roomer,
or tenant.
Note: These are
the same definitions used in the Home-Sharing Host Activities Amendatory
Endorsements.
The forms make several
revisions in this section. Specifically, they do the following:
Under Coverage B– Other Structures,
the form replaces parts of Property Not Covered, adding wording that expands
the item on rental of other structures. The result is that an exception is
created to cover such structures when rented or held for rental to a
“home-sharing occupant.” It also makes an exception, allowing protection for another
structure used in “home-sharing host activities.”
Under Coverage C–
Personal Property, the form replaces parts of Property Not Covered, adding
wording that excludes property that belongs to a “home-sharing occupant” or any
other person in the home related to “home-sharing host activities.”
Under Coverage D– Loss of Use, the form revises the title of item
2. From “Fair Rental Value” to “Lost Rental Value of “Home-sharing Host
Activities.”
The revised wording
applies specifically to providing coverage for loss of income related to making
covered property available to another party under a defined home-sharing
transaction. Coverage applies when an eligible peril occurs and makes that area
unavailable. Another unusual coverage is that lost rental income is also
available if it occurs because of an agreement that permits cancellation when
an official, National Weather Service Hurricane notice is announced. The notice
must include the location of the home-shared property.
The amount of any payment also depends upon the storm cancellation provisions
of the applicable home-sharing agreement.
Any reimbursement is net of expenses that terminate during the period that the
affected property is inhabitable or unavailable.
Under Coverage E–
Additional Coverages, the forms revise Landlord Furnishings. The coverage
wording is expanding so that the limited coverage available also applies to
furnishings related to use in “home-sharing activities.”
Under Coverage C, Personal Property, the following changes
have been made:
Under the theft exclusion, an exception is made for such
occurrences from parts of a residence that are used by a “home-sharing
occupant.” The coverage has a significant limitation because it continues to
bar coverage for valuable classes of property including money (and similar property),
precious metals (including plated utensils), coins, securities (and similar
valuable papers), jewelry, watches, furs, and gemstones.
Under this section, the forms modify the Other Insurance and
Service Agreement. The forms’ wording is expanded to make specific reference to
home-sharing network platforms. It makes the ISO policy primary over any
coverage available under a home-sharing agreement. Further, it specifically
classifies home-sharing agreements as a form of a guarantee or protection plan
rather than insurance.
Under the section’s business exclusion, wording is added to make
“home-sharing host activities” an exception to this exclusion.
The forms replace the base forms’ Coverage C. Damage to
Property of Others with Coverage C. Home-Sharing Host Activities Damage to
Property of Others. The result is to make the section’s payment subject to the greater
of $1,000 or the limit of liability that appears in the home-sharing host
activities endorsement schedule. It also carves out an exclusion exception for
home-sharing host activities.
Under this section, the forms modify the Other Insurance
condition. The forms’ wording is expanded to make specific reference to the home-sharing
network platform. It makes the ISO policy primary with respect to coverage for
eligible home-sharing host activities. Further, it specifically classifies
home-sharing agreements as a form of a guarantee or protection plan rather than
insurance.
Under this section, the optional forms add the following provision:
Home-sharing Host
Activities Verification Requirements
The optional endorsements obligate the named insured to
supply the insurance company with full information on the type and number of
rental agreement transactions made and home nights the covered residence was
occupied by home-sharing occupants. The information must be supplied whenever
requested by the insurer, but no number is referenced regarding requests except
that the amount should be reasonable.
A new, additional provision if the applicable policy happens
to be modified with Personal Injury Coverage. That endorsement is revised by
wording which creates an exception to the business exclusion that applies to
“home-sharing host activities.”