I have a client in St. Simon, GA. His permanent residence recently suffered a substantial fire forcing him from his domicile. Loss address 124 Jordan Lane, St. Simon, GA.
He also owns another single family residence (118 Jordan Lane) directly next door under an LLC. He typically rents the home throughout the year via Airbnb. He also has out of town guests/family stay there when they come to visit from time to time.
The carrier (Heritage) is taking a preliminary soft position that they will not pay the Airbnb price for him to stay at his rental property. However, Heritage has verbally agreed to pay his mortgage only, which is substantially less than what he gets through Airbnb rent on a monthly basis. Heritage has stated that the insured cannot profit from his loss, which generally speaking, I would tend to agree with to a degree.
Given the circumstances, the owner does not want to lose thousands of dollars in revenue monthly but also very much wants to live there during the rebuilding of his permanent residence due to the close proximity of the rental home.
The premise here is that the owner could go rent another fully furnished home for equal or more than what he charges for his own rental and the carrier would have to pay that amount anyway. Why not just allow their policyholder to stay in the home next door and honor the historically proven fair rental value of the 118 Jordan Lane home at the Airbnb price?
If you wish for more information or documentation, I would gladly supply it.
Florida Subscriber
The insured is entitled to the increased costs due to being displaced because of a covered loss. The insured operating as a business has nothing to do with his displacement due to the loss. If he ceases operating his Airbnb in order to stay there, that business decision is not a factor in his personal loss. He is entitled to increased costs due to being displaced. If the costs of the Airbnb are more than a reasonably similar rental, then the insurer only owes for the similar rental. The insured is entitled to maintain his normal standard of living. The issue is if the insured stays in his own property he is charging himself rent, and profiting from his loss. Admittedly, it may be cheaper in the long run, but because the property is being used for business purposes by the insured, that changes it entirely. The insured can't have it both ways - if he wants to stay in a property he owns because it's next door, he can't profit from his loss by charging himself rent, especially since he lets visiting family stay there. While we understand the insured's position, few insurers would be ok with an insured profiting from a loss by charging himself rent to stay in another property he owns.