BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1092|
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THIRD READING
Bill No: SB 1092
Author: Monning (D)
Amended: 4/21/16
Vote: 21
SENATE JUDICIARY COMMITTEE: 6-0, 5/3/16
AYES: Jackson, Moorlach, Anderson, Leno, Monning, Wieckowski
NO VOTE RECORDED: Hertzberg
SUBJECT: Advertising: Internet private residence rental
listings: notice
SOURCE: Association of California Insurance Companies
DIGEST: This bill requires residential hosting platforms to
provide a notice warning individuals to review any restrictions
on coverage under their homeowners' or renters' insurance policy
related to short-term rental activities to ensure that there is
appropriate insurance coverage in the event of a loss arising
out of those activities.
ANALYSIS:
Existing law:
1)Requires a hosting platform to provide the following notice to
occupants listing a residence for short-term rental on a
hosting platform:
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If you are a tenant who is listing a room, home, condominium,
or apartment, please refer to your rental contract or lease,
or contact your landlord, prior to listing the property to
determine whether your lease or contract contains restrictions
that would limit your ability to list your room, home,
condominium, or apartment. Listing your room, home,
condominium, or apartment may be a violation of your lease or
contract, and could result in legal action against you by your
landlord, including possible eviction. (Bus. & Prof. Code
Sec. 22592.)
2)States that the above notice shall be in a font size that is
equal to or greater than 100 percent of the standard font size
of the other paragraphs on the hosting platform's Internet Web
site or equal to the default font size on the hosting
platform's Internet Web site. Existing law specifies that the
notice shall be provided immediately before the occupant lists
each real property on the hosting platform's Internet Web
site, and shall require the occupant to interact with the
hosting platform's Internet Web site to affirmatively
acknowledge that he or she has read the notice. (Bus. & Prof.
Code Sec. 22594.)
3)Defines "hosting platform" to mean a marketplace that is
created for the primary purpose of facilitating the rental of
a residential unit offered for occupancy for tourist or
transient use for compensation to the offeror of that unit,
and the operator of the hosting platform derives revenues,
including booking fees or advertising revenues, from providing
or maintaining that marketplace. (Bus. & Prof. Code Sec.
22590.)
This bill:
1)Requires a hosting platform to provide the following notice to
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offerors listing a residence for short-term rental on a
hosting platform:
You should review any restrictions on coverage under your
homeowners' or renters' insurance policy related to short-term
rental activities to ensure that there is appropriate
insurance coverage in the event that a person sustains an
injury or loss for which you are responsible, a person damages
or causes loss to your personal or real property, or a claim
or lawsuit is made against you or otherwise arises out of
activities related to this hosting platform.
2)Makes other technical and conforming changes.
Background
In recent years, California has seen a rise in what is known as
the "sharing economy," with the influx of ridesharing businesses
such as "Lyft" and "Uber," and homesharing businesses such as
"Airbnb," "FlipKey," and "VRBO." Generally speaking,
homesharing consists of an agreement between two parties in
which one party rents out all or part of his or her home to
another party on a temporary, one-time basis. Service providers
like "Airbnb," "FlipKey," and "VRBO," advertise homes offered
for temporary rental and facilitate connecting renters with
offerors for a fee.
According to the National League of Cities, "[s]haring economy
businesses have been growing in cities, and presenting a new set
of challenges and opportunities for policy makers and city
leaders. While the sharing economy represents new and exciting
possibilities offered by technology platforms, cities are
finding that these innovative services also present a new set of
safety, taxing and business challenges." (DuPuis and Rainwater,
The Sharing Economy: An Analysis of Current Sentiment
Surrounding Homesharing and Ridesharing, National League of
Cities (2014)
Page 4
Last year, the Legislature addressed a concern that tenants
subletting their rented accommodations through a homesharing
service provider could place themselves at risk of eviction if
such activity violated their rental or lease agreement. SB 761
(Hall, Chapter 239, Statutes of 2015) directed homesharing
service providers - termed "hosting platforms" - to provide a
specified notice to offerors that would make them aware of
possible restrictions in their rental agreements and leases that
could subject them to eviction should they offer their unit for
short-term rental.
This bill directs a hosting platform to provide a similar notice
to homesharing hosts that warns them to review their insurance
coverage to ensure that they are adequately covered for losses
arising in connection with short-term rental activities.
Comments
The author writes:
Many homeowners and renters list their residences for short
term rental on internet hosting platforms, such as Airbnb,
HomeAway, and Vacation Rentals by Owner. Unfortunately, many
are unaware of the insurance ramifications if damage to
property or injury at the property occurs during the rental
period. Some homeowners or renters policies may provide
coverage when a "guest" is injured or when the "guest" breaks
or damages an item in the home or apartment. Many current
insurance policies allow some period of limited commercial
use, but the terms can vary significantly based on the
insurance company. If the activity is explicitly excluded by
the policy, the homeowner or tenant may be liable for injuries
or property loss.
It is important for homeowners and renters who make their
properties available through internet hosting platforms to
understand their insurance coverage and whether it will
protect them in the event that something unfortunate occurs
during the short term rental of their property. SB 1092
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requires internet hosting platforms to provide a disclosure to
homeowners and renters that they should check their
homeowners' or rental insurance policies to find out if they
are covered before engaging in home sharing activity.
Related/Prior Legislation
AB 2881 (Committee on Judiciary, 2016) adds mobilehomes to the
types of residences listed for short-term rental on a hosting
platform that would be subject to existing notice and disclosure
requirements.
SB 761 (Hall, Chapter 239, Statutes of 2015) required hosting
platforms to provide a notice to hosts listing a residence for
short-term rental stating that if the occupant is a tenant,
listing the residence may violate their lease or contract and
could result in legal action by their landlord, including
possible eviction. The bill specified that the notice must be
provided immediately before an occupant lists each real property
on an online platform or Internet Web site, and must require the
occupant to interact with the online platform Internet Web site
to affirmatively acknowledge that he or she has read the notice.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified5/10/16)
Association of California Insurance Companies (source)
American Insurance Association
California Apartment Association
CSAA Insurance Group
National Association of Mutual Insurance Companies
Pacific Association of Domestic Insurance Companies
OPPOSITION: (Verified5/3/16)
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None received
Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
5/10/16 11:32:13
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