What does Vancouver’s new short-term rental bylaw mean for insurers?

Ridesharing insurance is again in the spotlight, now that the City of Vancouver has announced it is regulating short-term rentals such as Airbnb, and allowing residents to apply online for a business licence as of April 19.

Vancouver City Council approved new regulations last year for short-term rentals of less than 30 days in principal residences in the city. The city noted in a quiz Thursday that a principal residence is one in which “you live more than 180 days of the year and receive mail, including bills, identification, taxes and insurance.”

Kaye Krishna, the City of Vancouver’s general manager of development, buildings and licensing, told Canadian Underwriter that the general purpose of that section of the quiz is to describe principal residence as an address that a person would receive mail from verified institutions, of which insurance would qualify. “We advise operators that they are responsible for costs and damages resulting from their short-term rental and we recommend that they ensure they have adequate insurance coverage,” she said.

But does that mean that the city is requiring short-term rentals to have insurance? “As with similar business licence requirements, the City of Vancouver does not require short-term rental operators to obtain insurance,” Krishna said. “Individual operators are encouraged to discuss their business with their insurance provider and ensure they are adequately covered for risks associated with the operation of their business. Short-term rental operator business licence applicants must declare that they understand that costs and damages associated with their business are their responsibility.”

Stefan Tirschler, product and underwriting manager at Vancouver-based Square One Insurance Services, told Canadian Underwriter last November that “speaking to home insurance in general, in most jurisdictions, including B.C., there isn’t provincial legislation that forces people to purchase home, condo, renter/tenant insurance.”

Among carriers that offer coverage for short-term rentals is Square One, which covers home contents, liability and loss of rental income. Wawanesa Mutual Insurance Company also offers a product to cover homeowners and condominiums for rental periods of 30 days or less (among other covers, Wawanesa’s policy covers theft and attempted theft caused by tenants and guests, damage caused by tenant vandalism, and theft or damage to tenant’s property up to $1,500). Aviva Canada also offers coverage as an add-on to an existing Aviva homeowner policy or standalone coverage for a secondary income property rented to short-term guests year-round (such as a cottage or house/condo).

Vancouver’s regulations were brought forward to address the estimated 6,600 illegal short-term rentals in the city. City Council enacted a bylaw on short-term rentals and estimates that at least 1,000 of the currently illegal short-term rental units in operation will not be eligible to receive a business licence and may be returned to long-term rental housing the city.

Commercial operations will not be permitted to receive a short-term rental business licence and will be subject to stronger enforcement and daily fines of $1,000, effective April 19. Property owners and tenants who currently operate a short-term rental have until Aug. 31 to obtain a business licence and post it in their online listings before they will be subject to enforcement.