With the increased cost of living and inflation, more homeowners are turning to short-term rentals to supplement their income. As the travel season kicks off, you might be thinking about doing the same. However, you should consider a few things to ensure you have the right insurance coverage and your rental complies with applicable laws.
Insurance considerations:
Hospitality to visitors is second nature to many of us in Atlantic Canada, however we must marry that sentiment with the realities of today. Your insurance representative will have a host questions for you when you let them know that you’re putting your home up for rent – and there are a lot of good reasons why.
The risks associated with a short-term rental are different from an owner-occupied home and understanding the details of your home insurance policy is key to avoiding unpleasant surprises about your coverage. Before opening your home to short-term rental guests, always check your policy and inform your insurance provider about your plans.
Why is this important?
If you don’t disclose the change in occupancy to your insurance provider and there is an accident, such as a fire, your policy could be voided. This means you could be left without insurance coverage for your property and its contents, which could include your guests’ damaged items.
As the owner of a short-term rental, you might also be responsible for the cost of stolen items, damage to shared areas or harm to a pet.
To ensure you are covered:
Contact your insurance company to confirm coverage before listing your short-term rental.
Inform your insurance representative of the change in how you are using your home or secondary residence.
Review our webpage on the different types of property insurance and for tips on lowering your risk when renting out your property.
Licence and registration:
Before listing your property as a short-term rental, you must register it with the appropriate provincial and municipal authorities, and obtain licences where required.
Nova Scotia: Register with the Tourist Accommodation Registry. Halifax Regional Municipality has a by-law with respect to short-term rentals – including registering with the Residential Rental Registry.
Newfoundland and Labrador: Register with the Department of Tourism, Culture, Arts and Recreation, at no cost.
Prince Edward Island: Obtain a Tourism Establishment Licence, or if in Charlottetown, obtain both a municipal and provincial licence. Renew these licences yearly.
New Brunswick: New Brunswick does not have provincial legislation governing short-term rentals. In Fredericton, a municipal short-term rental by-law governs. The by-law states that, under certain conditions, property owners who live in a dwelling in a residential zone may use part of the dwelling as a short-term rental. For further details on short-term rental conditions, please refer to the relevant by-laws.
For those residing in other municipalities, please check to see if your municipality has a short-term rental by-law.
Costs to consider:
Registration and licensing fees: Costs will vary by province and municipality. Failing to obtain the necessary licences can result in fines and authorities potentially shutting down your rental. Some municipalities have specific zoning laws affecting short-term rentals. Ensure your property is compliant with registration, licensing and zoning requirements.
Insurance: Additional coverage may be necessary, as regular homeowner’s insurance may not cover short-term rentals. Speak with your insurance rep.
Maintenance and upkeep: Perform regular maintenance and maintain cleanliness to help ensure your guests’ safety and to help avoid costly repairs in the future.
Damage and liability: Be prepared for potential damage. Consider including clauses for damage deposits and indemnity in your rental agreement.
Legal compliance: Ensure you comply with local laws, which may require regular inspections, water testing and monthly reports.
Resources:
For the latest information and local regulations, check with your municipality.
Helpful resources include:
Nova Scotia: Tourist Accommodations Registry
Newfoundland and Labrador: Tourism Accommodations Act and Regulations
Prince Edward Island: Tourism Industry Act
Starting a short-term rental can be a great way to earn extra income. But it is important to stay up-to-date with current regulations and ensure you have the right insurance coverage to help protect you and your property.
