Bill McGee

Special for USA TODAY

Plenty has been written here and elsewhere about the “sharing economy.” I first addressed the emergence of car sharing options in 2010 and again in 2013, and few are not aware of the stated benefits — particularly the cost savings — associated with peer-to-peer property rentals.

But that term “sharing” can cut two ways. What if you or a family member is injured while staying in someone else’s home? What if your guest causes a fire or other serious damage while staying in your home? Who will “share” in the expenses? Who will file an insurance claim — and will either party be covered?

The answers to those types of questions remain works in progress.

A fast-growing market

Even if you haven’t participated, you’re probably familiar with some of the bigger names in this burgeoning market: Airbnb, FlipKey, HomeAway, VRBO. To provide some perspective, Airbnb now boasts of 2 million listings in 34,000 cities across 191 countries. And in 2015 the market’s potential growth was underscored by Expedia’s acquisition of HomeAway, at a cost of $3.9 billion.

A report from Ernst & Young entitled “Global Hospitality Insights” for 2016 indicates peer-to-peer listings continue to encroach on the traditional hotel market; for example, Airbnb’s inventory now represents about 7.6% of the total London lodging industry. And in areas with fewer hotels, such percentages are considerably higher. In the New York City borough of Brooklyn, for example, Airbnb represents 38% of the lodging market.

Concerns about the industry skirting regulations and taxes — and even denying rentals to customers based on race — prompted three U.S. senators in July to formally request the Federal Trade Commission investigate Airbnb and other home-rental sites. Sen. Elizabeth Warren (D-Mass.) cited concerns that “communities and consumers may be put at risk through violations of sensible health, safety and zoning regulations under state and local law.” Among the issues being debated is the topic of insurance coverage.

'Insuring' you’re investing wisely

Despite the gains posted by this new economic model, there are still many would-be customers who remain unfamiliar or maintain reservations and concerns. A 2015 report from PricewaterhouseCoopers entitled “The Sharing Economy” noted 56% of U.S. adults surveyed were “not familiar” with sharing. Furthermore, among those who had tried sharing, 57% agreed with this statement: “I am intrigued by companies in the sharing economy but have some concerns about them.”

Indeed, one CEO of a car sharing company cited in this report acknowledged the “biggest challenge” in the shared economy is insurance: “And insurance — whether it’s your house, your car, your driver — is really a fragmented market. They don’t know how to deal with people occasionally using their asset. There are major issues around people who don’t understand the risks they’re taking on.”

The bottom line is that the insurance industry remains in flux when it comes to handling peer-to-peer rentals. Such sentiments were echoed in “Insurance 2.0: Insuring the Sharing Economy & Sharing the Insurance Economy,” a 2015 white paper prepared for the Casualty Actuarial Society. The paper concluded: “We believe this peer-to-peer trend will continue and could culminate in true peer-to-peer insurance, or risk transfer between individuals, with regulators constantly playing catch up and insurers either adapting or being displaced.”

Among insurance professionals, there is concern about covering vacation and short-term rentals, with one trade publication dubbing it “the scary insurance reality.” In the meantime, many questions remain for homeowners and renters.

• First things first: Is your transaction legal?

Across the country and across the world, regulatory and legislative measures are being imposed on this new growth industry, and in some cases it can make both the owners and the renters in violation. For example, last year strict regulations were imposed on short-term rentals in Santa Monica, Calif., including a requirement that homeowners register for licenses as businesses and the imposition of a 14% hotel tax. The city estimated this would eliminate about 80% of peer-to-peer rentals.

Before entering such a transaction, make sure you’re not breaking any of the local laws.

• Is the homeowner covered?

The Insurance Information Institute — an organization funded by that industry — provides an analysis that sums up peer-to-peer rentals succinctly: “If you are considering renting out your home, your guest room or even your couch, your first step should be to contact your insurance professional.”

The III states that “in general” if you’re renting out your home for a single occasion, many insurance companies will extend your coverage to the renter — BUT ONLY if notified ahead of time. That said, some insurance companies may require the homeowner to purchase an “endorsement” rider to the policy that will provide coverage for the renters, and such prices depend on a wide variety of variables.

• Will you need to buy additional coverage?

But what if you rent out your home — or even part of your home — on a much more frequent basis? It should be noted Airbnb has stated its typical host shares their home 66 days per year. In such cases, you may need to purchase a business policy (such as those used by hotels and bed-and-breakfast establishments), which can be much more expensive. Standard policies are designed for personal rather than commercial use, and the frequency of your rental activity may designate your peer-to-peer transactions as a business.

In fact, some insurance firms are starting to offer “home-sharing liability insurance policies.” And some are available on a month-to-month basis, so you only pay during periods when you are renting out your home. Ask your insurance provider about such options.

• What about coverage for renters?

The good news for renters, according to the III, is that in most cases your own homeowners or renters insurance policy may cover damage to or theft of your personal possessions at another location. It may also cover you if you accidentally injure someone off-premises. But you need to confirm such coverage in advance.

• What about insuring through the sharing company?

This is also an option. Airbnb, for example, offers Host Protection Insurance. Sister companies HomeAway and VRBO both offer Property Damage Protection through CSA Travel Protection, starting at $59 for $1,500 of coverage. Obtaining details and even specific prices online can be difficult, and experts warn there are many caveats and exclusions, so you may want to consider such direct-buy products for secondary rather than primary coverage.

• As always — read the fine print

Whether you’re the owner or the guest, it’s critical to learn more about your insurance options before you sign the deal. The standard warning is that there may be exclusions or limitations, so it’s important to read your policy carefully. Or better yet — ask your insurance agent.

The Better Business Bureau offers two additional tips. One is to be cautious if the site asks for a credit card number to lock in a date. And the other is a reminder that conducting an Internet search for any irregularities can yield helpful results when you’re considering such a transaction.

Bill McGee, a contributing editor to Consumer Reports and the former editor of Consumer Reports Travel Letter, is an FAA-licensed aircraft dispatcher who worked in airline operations and management for several years. Tell him what you think of his latest column by sending him an email at travel@usatoday.com. Include your name, hometown and daytime phone number, and he may use your feedback in a future column.