June 27, 2022 UPDATE
Yesterday, a 7-year-old girl drowned in a pool that a homeowner reportedly rented, through Swimply, to a group that allegedly included about 15 children:
Presumably since my initial blog post about Swimply (see below), the company now includes liability insurance of up to $1,000,000 to renters. Limited information about this coverage and some exclusions can be found here:
The question is, who much is the life of a 7-year-old child worth? Quite likely more than a million dollars. As discussed in the original blog post, most homeowners policies do not cover liability for “business” activities and it’s quite possible, perhaps likely, that this exposure would be considered a business activity. Some umbrella policies might provide coverage, but given the prevalence of ‘following form’ policies and the use of business exclusions in umbrella policies, they are unlikely to be reliable sources for coverage.
More likely the best risk management approach to renting out your swimming pool is avoidance…don’t do it.
Recently, Sue West, CPCU, a Tennessee insurance agent brought an article to my attention:
So, does this present any problems for the pool owner? For example, might this impact coverage under the owner’s homeowners policy and umbrella policy? The Swimply web site includes this:
Swimply recommends that Hosts obtain appropriate insurance for their Accommodations. Please review any insurance policy that you may have for your Accommodation carefully, and in particular, please make sure that you are familiar with and understand any exclusions to, and any deductibles that may apply for, such insurance policy, including, but not limited to, whether your insurance policy will cover the actions or inactions of or relating to Guests (and the individuals the Guest invites to the Accommodation, if applicable) while at your Accommodation.
As a Host, you understand and agree that Swimply does not act as an insurer. If a Guest requests a Booking of your Accommodation and stays at your Accommodation, any agreement you enter into with such Guest is between you and the Guest, and Swimply is not a party to it.
I didn’t look any further at disclaimers, hold harmless agreements, etc. on their web site. We know that there’s no liability coverage under ISO HO policies for “business” activities like renting a structure or otherwise engaging in something for monetary gain. Likewise, under an HO policy like the ISO HO 00 03, there is likely no coverage for damage to the pool if insured under Coverage B because of this business use.
I live on a lake and someone posted on our neighborhood NextDoor app that they were looking to rent a slip at someone’s dock for their boat. Several people responded and I posted that they’d better check on their homeowners insurance for this serious exposure.
In fact, in addition to the obvious and potentially catastrophic liability exposure, I suggested they ask if they even have any coverage TO the dock to begin with since these docks are on Army Corps of Engineers property and not on their “residence premises” as required for Coverage B.
My covered dock would cost about $40K to replace…I have it insured by endorsement but I’d be willing to bet that there are thousands of lake homeowners that don’t. Many of them may have umbrella policies that, in addition to their homeowners policies, likely won’t provide coverage for this business exposure.
There’s another startup like this that has a phone app that facilitates renting personal property (e.g., chain saws and skill saws) that are unused 99.9% of the time. Imagine the liability exposure for that beyond the business property limitations that are triggered.
People don’t think about the seriousness of their exposures to loss, possibly in part because 90% of the insurance TV ads they see multiple times every day focus on how hilarious and cheap insurance can be.
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