Taylor Swift Insurance: Preparing Your Clients for Mega Concert Opportunities

Taylor Swift’s Eras Tour took the world by storm last year, leaving behind a significant economic impact. Following her final Canadian shows, estimates suggest the tour generated $282 million for Toronto and $157 million for Vancouver. 

Large-scale events play a significant impact within local economies, driving surges in demand for lodging and accommodations. During Swift’s Toronto concerts, hotel prices downtown Toronto skyrocketed, with rooms up to $3,000 per night compared to an average of $300. Airbnb and VRBO reported rates up to ten times higher than usual, tempting many property owners to cash in by offering their spaces for temporary stays. 

But with great opportunity comes responsibility and risk. Brokers play a critical role helping clients navigate the complexities of short-term rentals. Dominic Alves-Machado, President of Distinct Insurance, emphasizes the importance of balancing opportunity with risk management. 

“We need to ensure that clients looking to capitalize on short-term rental opportunities understand the risks and have comprehensive coverage that includes protection against property damage, liability and potential loss of income. It’s about education, advice and smart decision-making.” 

Risk Management Essentials 

For brokers advising property owners entering the short-term rental market, ensuring adequate insurance coverage is key. This involves clear communication, proper policy alignment and an understanding of the unique risks associated with short-term rentals. Scott Graham, Commercial Lines Broker at Rozon Insurance Brokers, highlights the importance of clear communication. 

“The guiding principle of utmost good faith prevails here,” Graham explains. “Disclosure by the insured to the broker, and the broker to the insurance market, is crucial. Open, honest discussions with underwriters can help avoid painful consequences if a loss occurs due to a material change in risk.” 

Sam Jazayeri, Director of Operations at PrimeService Insurance, emphasizes the importance of aligning clients’ policies with their intended property use: 

“If a policy doesn’t allow for Airbnb usage, the entire policy and all coverages become null and void. Clients must always confirm permission for Airbnb usage.” 

Jazayeri outlines several key points to consider: 

• Insurer Limitations: Some insurers don’t allow short-term rental coverage, while others may offer it for a premium. 

• Longer Impacts: Airbnb usage, even for a single instance, increases the cost for the entire policy duration, not just during the short-term rental period. 

• Specialty Products: While standard insurers often don’t permit Airbnb use, certain carriers and specialty insurers provide solutions, particularly for properties used as full-time short-term rentals. 

Greg Orr, Account Executive at Orr Insurance Brokers, provides insights into short-term rental coverage, highlighting the structured nature of these policies.  

• Higher Premiums: Increased premiums for short-term rental coverage vary based on the home’s value and insurer-specific guidelines. 

• Annual Coverage Requirement: Unlike temporary add-ons, short-term rental endorsements generally apply for the full policy year. 

Orr emphasizes time restrictions—short-term rental of a primary residence typically can’t exceed 30 consecutive days or be rented for more than 180 days in a 365-day period, whereas for seasonal residences, it typically can’t exceed 60 consecutive days in the same period. If clients intend to rent beyond these limits, they may need to have the dwelling classified as a rented dwelling or consider a Commercial policy. Once clients comply with rental guidelines and complete the necessary documentation, they can often obtain coverage without difficulty.   

But placing this type of risk can be time-consuming for brokers and clients alike. “Careful insurance consideration is essential—clients can’t Airbnb on a whim,” Jazayeri advises. 

The Growing Role of Brokers in Live Event Economies