These days millions of homeowners are rushing to to rent out the extra space they have in their home. In some cases they are renting out their entire homes. And while renting out your home is a great way to generate extra income, it is also a very risky move.

The first risk you take on when using a site like Airbnb is the risk of your insurance not covering a claim. Homeowners insurance covers the homeowner. In almost all cases it will NOT cover a short term rental.

Before using a site like Airbnb, take the time to call your insurance provider. Let them know what you are trying to do and get advice on the type of insurance you will need. Depending on the situation, a simple upgrade may be all you need. However, in some cases your insurance provider will require you get a business liability policy to ensure your home is adequately covered.

It is recommended you speak with a qualified insurance professional who can review your situation and come up with the best possible solution.

The second risk you have is with the tenants. Keep in mind these are people you don’t know. In some cases they may even be from a different country. You are basically letting a complete stranger come into your home and stay for a short period of time.

And while Airbnb does do their part to vet all guests and ensure they are who they say they are, the reality is when they get into your home you have no idea what they will do. What if they damage your property? What if they steal some of your belongings? Or even worse, what if they are doing illegal activities in your home?

These are the types of risks you take when you are renting out your home to a complete stranger. So as you can see, the potential for liability is enormous.

Who Is Richard Blair?

Richard Blair is a registered investment adviser who has a heart for teaching. His goal is to help as many families, individuals and small business owners secure their financial future.

Blair grew up in a world full of teachers. His grandmother, mother and wife were all teachers. He got a first hand look at how education can change someones life. He started his independent firm Wealth Solutions in 1994 with the objective of providing unbiased advice to all of his clients.

Learn more about Richard Blair and follow his blog