City leaders remove $1M insurance requirement for Airbnbs and other short-term rentals

photo by: Chris Conde

Lawrence City Hall, 2018.

City leaders decided that they will not require Airbnb and other short-term rental operators to carry insurance.

When the Lawrence City Commission voted Sept. 19 to require permits and licenses for short-term rentals, some said they were unsure about a $1 million insurance requirement and would like to to discuss it further. At its meeting Tuesday, the commission voted 4-1, with Commissioner Leslie Soden against, to strike that requirement from the regulations.

Vice Mayor Lisa Larsen pulled the regulations from the commission’s consent agenda. Larsen said she wanted the commission to consider not requiring the insurance, as it is not required for hotels or long-term rentals.

“So I’m curious as to why we are applying this to this type of a situation when we don’t require it on other types of programs,” Larsen said.

Under the newly created regulations, licenses for short-term rentals require yearly inspections, proof of taxes paid, and adherence to the city’s parking and occupancy rules. As originally proposed, the regulations also required short-term rental operators to have a certificate of insurance in an amount of at least $1 million for casualty, personal injury and property damage.

In response to Larsen, Director of Planning and Development Scott McCullough said that while city code doesn’t have requirements related to hotel insurance, it’s assumed hotel companies have insurance in place. He said that may not be the case for more mom-and-pop accommodations like short-term rentals, which he said also differ from long-term rentals.

“Like much of the program itself, it’s a consumer protection to ensure that there is liability insurance to cover any events that occur at the property,” McCullough said. “As (Senior City Attorney) Randy Larkin mentioned last week, it’s a little bit different than long-term rental, where a tenant has the ability to get renters insurance to cover their possessions and matters.”

Mayor Stuart Boley asked if regular homeowners insurance covered people who used their home as a short-term rental. McCullough said that it’s an evolving industry, and the research the city has done has shown that is not always the case.

Soden, who works for an insurance company, agreed that the question was evolving and said homeowners may need to register their property as a commercial property and pay a corresponding rate if they are regularly using it as a short-term rental. Soden suggested the commission leave the requirement in place and revisit the topic in a year once there was more clarity on the issue.

Commissioner Jennifer Ananda said she had voted against adopting the short-term rental regulations because of the insurance requirement. She said she was concerned the requirement could be taking away an option for homeowners who are operating short-term rentals to afford to stay in their homes.

“Part of it was not understanding the full impact of the costs,” Ananda said. “When we are hearing from folks who are trying to supplement their incomes in their homes, what kind of costs are we placing on them to make this not worth their time?”

Commissioner Matthew Herbert said that a lot of the short-term rental platforms are responding faster than insurance agencies and already provide short-term rental operators with insurance coverage. For instance, he noted that Airbnb, which is one of the most popular sites, automatically provides both liability and property insurance to property owners that use their platform. Herbert said he thought the city was making short-term rental operators jump through too many hoops when the issue is already being addressed.

“I think in a lot of ways your vendors are actually responding faster than your insurance agency,” Herbert said.


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