New MA Short Term Rental Laws for Airbnb-Type Home Rentals

by | Jan 14, 2019 | Homeowners Insurance, Mass Laws, News, Personal Risk, Rentals, Sonia Borges

With the New Year finally here, many of us may have made it a resolution to travel more often this year. So, many of us may be sitting down with our travel agents, or booking our vacations on our own. The choices could be endless as to where we would like to go or stay. Should we book a cruise, should we stay at a hotel, or, as of late, should we stay at an Airbnb?

The thought then may cross your mind, well since I’ll be away, should I in turn rent my house on an Airbnb site?

This is where I would like to step in and stay, STOP!

There are a few things you should know if you think about renting your home on Airbnb site.

Did you know, that “on December 31, 2018, Governor Baker signed the first in the nation statute to require registration and taxation of the short-term use of residential property through websites like Airbnb?”

A quick thumbnail of the new law is that it defines a “short-term rental,” in pertinent part, as:

“ owner-occupied, tenant-occupied or non-owner occupied property including, but not limited to, an apartment, house, cottage, condominium or a furnished accommodation..where: (i) at least one room or unit is rented to an occupant or sub-occupant: and (ii) all accommodations are reserved in advance.

However, the short term-rental must be a period of less than thirty-one consecutive calendar days.

Based on this definition anyone who operates a short-term rental becomes an “Operator” who must comply with the statute. These obligations include the short-term rental operator:

  • registering every property used for short-term rental with the state’s Department of Revenue (DOR):
  • imposing and collecting the 5.7 percent state lodging tax and any local city and town taxes now allowed on short-term rentals:
  • maintaining the statutory required liability insurance for the short-term rental property

Persons who do no more than fourteen days of short-term rental in a calendar year can file for an exemption with the DOR. However, they are still liable to register and maintain the required liability insurance.

The law defines a “Hosting Platform” to include those companies like Airbnb, providing advertising, rent collection, and insurance services of short-term rentals.”

As a homeowner or renter, it will be your responsibility and duty to notify your insurer of your intent regarding a short-term rental.

The law requires that you maintain a minimum insurance liability limit of $1,000,000, unless such short-term rental is offered through a hosting platform that maintains equal or greater coverage. “Such coverage shall defend and indemnify the operator and any tenants or owners in the building for bodily injury and property damage arising from the short-term rental.” 

“One gap noted in the free liability coverage offered by Airbnb and possibly other hosting platforms, is that there is no personal injury coverage.” Therefore, it is very important that you have a conversation with your agent about your coverage, and your intent, so that you are able to fully understand the policy and the exposure.

The hosting platform in which you are using should be notifying you that that your standard homeowners or renters insurance may not cover property damage or bodily injury to a third party arising from the short-term rental.

There are many carriers, which may not offer any coverage for this type of exposure at all. There are also carriers that may. Therefore, it is important to be transparent with your agent and discuss your intent to ensure that you are insured properly.

“Any policy or policy form intended to cover operators of short-term rentals from liabilities, whether the policy or policy form is provided by a hosting platform or an operator itself, shall be filed according to instructions provided by the division of insurance.”

It is important to fully understand the law, and abide by its requirements. Also note, that this law will go into effect this summer 07/01/2019, but apply to any short-term rental booked on or after 01/01/2019, for stays on or after July 1, 2019.

Should you wish to discuss this information, on an existing policy that you have with FBinsure, please feel free to reach out to any one of your qualified client service managers. If you are in the process of purchasing a new property, or would like me to quote an existing policy that you may have with another agent or company, please feel free to reach out to me, Sonia M. Borges.


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