General Information Only. This article is for general informational purposes and does not constitute legal advice. Laws may have changed since publication. Your situation may differ; consult a licensed Virginia attorney about your specific matter.
The information in this article is for general informational purposes only and does not constitute legal advice. Laws change and individual circumstances vary. Consult a licensed Virginia attorney about your specific situation. Reading this article does not create an attorney-client relationship nor does merely contacting our office through this website or any other means.
You bought the house, you insured the house, and then you started renting it. Nobody sends a notice when those three facts stop lining up.
The awkward part is that coverage questions almost always surface at the worst possible moment, which is after something has happened. And they tend to fail at the same two places: an exclusion the owner never read, applied to facts the owner never reported. Both of those are checkable in an afternoon, which makes this one of the few areas where an hour of attention genuinely changes your position.
Exclusions Can Name Renting Directly
Business-use exclusions get described in general terms. It is worth seeing how specific the language can actually be.
In State Farm Fire & Casualty Co. v. Rollins (E.D. Va. 2016), a federal court applying Virginia law quoted the policy in front of it. Liability and medical payments coverage did not apply to “bodily injury or property damage arising out of business pursuits of any insured or the rental or holding for rental of any part of any premises by any insured.”
Read that second half again. It does not ask whether you are running a business in any conventional sense. Renting any part of the premises, or holding any part of it out for rent, is named on its own terms.
Two cautions belong with that quotation, and they matter. It is the language of one policy as it stood in that case, and forms differ between insurers and change over time. And the dispute in Rollins was actually decided on a different exclusion. The point is not that your policy says this. The point is that policies say things like this, and yours might, and you can find out today.
How Virginia Reads an Exclusion
Virginia’s rules of construction start out favorable to policyholders, then run into a limit that does most of the real work.
The favorable part, as the court in Rollins set it out quoting Virginia decisions: insurance policies are contracts “whose language is ordinarily selected by insurers rather than by policy-holders.” Doubtful language is construed “in favor of that interpretation which grants coverage, rather than that which withholds it.” Where two constructions are equally possible, “that most favorable to the insured will be adopted.” And language purporting to exclude events from coverage “will be construed mostly strongly against the insurer.”
Then the limit. Under TravCo Insurance Co. v. Ward (2012), “where the exclusion is not ambiguous, there is no reason for applying the rules of contra proferentem or liberal construction for the insured.” A policy is not ambiguous merely because courts in different states have read similar language different ways.
Which means the pro-coverage rules only engage if the exclusion is genuinely ambiguous. A clearly worded exclusion is simply applied. The Rollins court also declined to read narrowing language into a broad exclusion that the insurer had not put there.
Labels Lose to Facts
The most useful part of Rollins for a rental owner has nothing to do with rentals.
The insured there consistently described what she did as babysitting, a word her policy treated more favorably than child care services. The court declined to adopt her terminology, saying it would “look beyond the terminology used to the actual time and services provided.” It then examined frequency, regularity, payment, and whether the arrangement was open-ended, and concluded the exclusion applied.
The parallel is direct. Whether your activity counts as a business pursuit, or as occasional, or as incidental, gets decided on what you actually do. How often the property is booked, whether you advertise, whether you take payment, whether the arrangement is ongoing. All of that will outweigh how you described it in a phone call.
Worth noticing what that suggests about the phone call. Describing your use accurately is not just candor; reporting actual use is usually a condition of the coverage you are hoping to have.
Platform Programs Are Not Your Policy
Booking platforms commonly offer host protection or host guarantee programs, and owners routinely treat them as insurance.
Describe them accurately to yourself. These programs are typically limited in scope, carry conditions and exclusions of their own, and are structured as a supplement rather than a replacement for the owner’s own coverage. Their terms are set by the platform and change without your involvement.
Because those terms change, do not rely on any summary of them, this one included. Pull the current program terms from the platform, note the date you retrieved them, and keep that copy with your insurance file. Knowing what a program does not do is the part that matters, and the time to know it is not the week you need it.
When Someone Else Operates the Property
If a management company runs your property, the question of who is covered gets more tangled.
An additional insured endorsement extends coverage under one party’s policy to another party. Owners and managers each commonly want it from the other, and the requirement usually appears in the management agreement rather than in either policy. So the contract and the coverage have to be read together, because an agreement can promise something a policy does not deliver.
A certificate of insurance is evidence that a policy existed on the day it was issued. It is not the policy and it does not change the policy’s terms.
Questions Worth Putting in an Email
Ask these in writing, and keep the answers. Coverage disputes get resolved against records, and a written answer from your agent is a record.
- Does my current policy exclude bodily injury or property damage arising out of the rental, or holding for rental, of the premises?
- I rent this property roughly this many nights per year and advertise it this way. Does my policy respond to a guest injury claim on those facts?
- What endorsement or separate policy would cover this activity, and what does that exclude?
- If a management company operates the property, who must be named on whose policy, and does my management agreement match?
- Is there any limit or condition tied to how many days per year the property is rented?
The Questions Worth Sitting With
- Find your policy and read the liability exclusions yourself, looking for the words rental, business pursuits, and premises. That is a twenty-minute job and nobody else will do it.
- Write down your true operating facts before you describe your use to anyone: nights booked, how you advertise, what services you provide.
- Do you have a dated copy of the current terms of any platform program you are counting on?
- If a manager runs the property, do the agreement and the policies actually agree with each other, or has nobody read them side by side?
- Does anyone’s coverage respond to defense costs, which arrive whether or not a claim ultimately succeeds?
That last one is worth sitting with a moment. Virginia’s rules about what duty an owner owes an injured occupant can be more favorable than owners expect, but a favorable rule still has to be argued by someone, and coverage is often what pays for that.
Coverage turns on the specific policy wording, the facts of your operation, and how a claim is presented. If you have never confirmed in writing that your policy responds to a guest injury at a rented property, that confirmation is the first thing worth having, and a Virginia attorney can read the policy and your management agreement together if the answers do not line up.
This article is general information only and is not legal advice. Laws change and individual circumstances vary, and outcomes depend on the specific facts of each situation. Do not rely on this article to make decisions about your specific situation; contact Valley Legal or a licensed Virginia attorney to discuss your case. Reading this article does not create an attorney-client relationship, nor does contacting our office through this website or any other means. Attorney advertising.
Valley Legal, PLLC is located at 107 Pepper St SE, Christiansburg, Virginia 24073, and serves the communities of the New River Valley of Virginia, including Montgomery County, Blacksburg, Radford, Pulaski County, Floyd County, and Giles County.