HomeMy WebLinkAboutCOR-2025-288 - Supplemental Report to Short-term Rental By-law Report COR-2025-041Staff Report
J
IKgc.;i' r� R
Corporate Services Department www.kitchener.ca
REPORT TO: Council Meeting
DATE OF MEETING: June 23, 2025
SUBMITTED BY: Amanda Fusco, Director of Legislated Services, 519- 904-1402
PREPARED BY: Kristin VanDerGeld, Manager of Licensing, 519-904-5605
WARD(S) INVOLVED: ALL
DATE OF REPORT: June 11, 2025
REPORT NO.: COR -2025-288
SUBJECT: Supplemental Report to Short -Term Rental By-law Report COR -2025-041
RECOMMENDATION:
For information.
REPORT HIGHLIGHTS:
• The purpose of this report is to provide additional information related to the insurance
requirements proposed in the Short -Term Rental By-law as requested by Council at the
June 2, 2025, Finance and Corporate Services Committee meeting
• The key finding of this report is that standard homeowner's insurance policies do not
cover short-term rentals, that failure to disclose a short-term rental operation can void a
standard homeowner's policy for failure to disclose a material change in risk, and that the
City's insurance requirements should not add costs beyond that which is already required
to secure appropriate coverage for a short-term rental operation.
• Staff continue to recommend the Short -Term Rental By-law as proposed through report
COR -2025-041 and supported by public engagement.
• This report supports Building a Connected City Together: Focuses on neighbourhoods;
housing and ensuring secure, affordable homes; getting around easily, sustainably and
safely to the places and spaces that matter.
BACKGROUND:
On June 2, 2025, the Finance and Corporate Services Committee reviewed report COR -2025-
041 (Short -Term Rental By-law), which outlined a proposed licensing framework to regulate
short-term rentals through a dedicated by-law. The proposed regulations have received broad
support from residents, stakeholders and short-term rental (STR) owners/hosts based on prior
engagement. At the meeting, staff were directed to gather additional information regarding the
proposed insurance requirements and the associated costs for STR owners/hosts to comply with
this aspect of the by-law given questions and concerns raised by delegations.
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
Page 15 of 64
REPORT:
Following the discussion on June 2, 2025, staff, in collaboration with the Waterloo Region
Municipalities Insurance Pool, conducted additional research into insurance requirements and
associated costs. This included consultations with various insurance brokers and the Insurance
Bureau of Canada. It became clear that:
1) A standard homeowner's insurance policy does not provide coverage for short-term
rental (STR) operations
2) Operating an STR requires specialized insurance, which typically involves higher
premiums due to the increased risk.
3) Failing to disclose STR activity to an insurer constitutes a material change in risk and can
void liability coverage in the event of a claim.
Traditional insurers typically avoid covering short-term rentals (STRs) due to the heightened risk,
meaning operators must seek coverage through the specialty insurance market.
A review of relevant case law including Tiny Township Association v Township of Tiny and Munir
v. Garg confirms that STRs are considered a business. These rulings support the need for
inspections and insurance requirements to protect the health, safety, and well-being of renters
and the surrounding community, while also ensuring consumer protection. Although staff are not
recommending the publication of STR owner information on the City's public -facing website, it
has been confirmed that the collection and publication of personal information under a licensing
by-law does not contravene the Municipal Freedom of Information and Protection of Privacy Act
(MFIPPA) as the properties are being used for business purposes.
As part of the proposed by-law, staff recommend requiring short-term rental license applicants
to provide proof of adequate insurance coverage, with the City named as an additional insured.
Applicants would also need to submit a signed indemnity in favour of the City. Through
discussions following the committee meeting it became clear there was some confusion on the
part of delegates surrounding the indemnity, as they indicated that securing a "blanket indemnity"
would add considerable cost. To be clear, this is not a blanket indemnity; it only applies when
losses arise from, or are alleged to arise from, the licensee's negligence, breach of contract, or
violation of the law. These requirements were developed in consultation with the Waterloo
Region Municipalities Insurance Pool, which advised their inclusion to help protect all parties
involved in short-term rentals—namely, property owners, renters, and the City.
Furthermore, it is commonplace for municipalities to be made "additional insureds" on business
activities. Similar provisions exist in the City's other licensing by-laws, such as the Business
Licensing By-law and the Lodging House By-law. However, STR owners and hosts have
expressed concern that the insurance requirements may lead to a significant increase in their
insurance premiums.
Page 16 of 64
We Heard
We Learned
Adding the City as an additional insured
A standard homeowner's insurance policy
increases costs for the STR owner.
does not provide coverage for short-term
rental (STR) operations. Operating an STR
requires specialized insurance, which
typically involves higher premiums due to the
increased risk. Failing to disclose STR
activity to an insurer constitutes a material
change in risk and can void liability
coverage in the event of a claim. Adding an
additional insured does not affect premiums;
rates are determined by the risks associated
with STR use. This specialized insurance is
necessary regardless of whether a
municipal licence is in place.
Indemnification leads to increased costs for
The indemnification does not increase
the STR owner.
premiums. Requiring indemnification may
expose to an insurer that adequate insurance
in not in place resulting in speciality
insurance being required, which typically
involves higher premiums. The proposed
application requirements contain a certificate
of insurance template to assist with data
collection and reduce the time required to
draft the indemnification certificate. This
template is currently used to satisfy
insurance requirements associated with
Lodging House applications.
Delegates offered to provide quotes to
Since June 2024, only a couple of STR
illustrate significant increase in insurance
owners have submitted policy information.
premiums.
While some of them do have STR coverage,
any increase does not appear to be
attributable to the addition of the City as an
additional insured/indemnity.
STRs impact the availability long term
The proposed STR By-law functions in a
housing.
similar way to Rental Replacement and
Renoviction By-laws, aiming to help preserve
the existing housing stock. Licensing allows
for data collection to help to track trends
such as the impact on long-term housing.
In conclusion, based on outreach completed since the previous meeting, the key finding is that
the City's insurance requirements should not add costs to a STR operator provided they already
have adequate insurance in place. If an operator is under -insured, their homeowner's policy
may be voided in the event of a claim, which represents a concern from a public safety and
consumer protection perspective. This is one of the reasons for the City to require proof of
insurance and to enter into a licensing program for short-term rentals.
Page 17 of 64
STRATEGIC PLAN ALIGNMENT:
This report supports the delivery of core services.
FINANCIAL IMPLICATIONS:
Capital Budget — The recommendation has no impact on the Capital Budget.
Operating Budget — The recommendation has no impact on the Operating Budget.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted to the City's website with the agenda in advance of the
council / committee meeting.
CONSULT — Staff consulted with various insurance professionals, brokers, and Insurance
Bureau of Canada.
PREVIOUS REPORTS/AUTHORITIES:
• Short -Term Rental By-law COR -2025-041
APPROVED BY: Victoria Raab, General Manager Corporate Services
ATTACHMENTS: None.
Page 18 of 64