Illinois Airbnb Laws and Regulations – What Hosts in the Prairie State Need to Know

Chicago, Illinois, Airbnb Laws

Short-Term Rental Laws for Hosts in Chicago, IL

Chicago requires hosts to secure a business license for short-term rentals and undergo property inspections as deemed necessary by the City Building Commissioner. Hosts must also maintain fire, hazard, and liability insurance with a minimum of $1,000,000 in commercial general liability. Key requirements include:

The city has also clearly laid out the following Airbnb laws and regulations for hosts:  

• Definition of Short-Term Rental: A vacation rental in Chicago is defined as a dwelling unit containing 6 or fewer sleeping rooms available for rent or hire for transient occupancy by guests.
  • Exclusions: The term “vacation rental” does not include a dwelling unit under a month-to-month rental agreement with a monthly payment, corporate housing, guest suites, or shared housing units.
• Primary Residence Requirement: In a building with 4 units or fewer, the vacation rental dwelling unit must be the licensee’s primary residence, where the applicant lives daily for at least 245 days in the applicable calendar year.
• Zoning: Hosts should check their zoning designation before applying for a business license.

Application Requirements for a Vacation Rental License in Chicago:

Documents and information required for a vacation rental license application include:

• Property Type Statement: A statement indicating whether the dwelling unit is: (i) a single-family home, and if so, whether it is the applicant’s primary residence; (ii) a building containing two to four dwelling units, and if so, whether the unit is the applicant’s primary residence; or (iii) a building containing five or more dwelling units.
• Local Contact Person: The name, address, and contact information of a local contact person must be provided.
• Local Contact Affidavit: An affidavit from the local contact person attesting that they: (a) are designated for service of process; (b) are authorized by the owner to take remedial action and respond to any violation of the Code; and (c) maintain a residence or office located within the City.
• HOA Attestation: If the dwelling unit is subject to restrictions imposed by a homeowner’s association or board of directors, an attestation that the HOA or board has not adopted bylaws prohibiting the use of the unit as a vacation rental or shared housing unit.
• Rental Agreement Attestation: If the unit is subject to a rental agreement, an attestation that the building owner has not prohibited the use of the dwelling unit as a vacation rental or shared housing unit.
• Proof of Insurance: Documentation of: (1) Homeowner’s fire, hazard, and liability insurance; and (2) Commercial General Liability insurance with limits of not less than $1,000,000 per occurrence, combined single limit, for bodily injury, personal injury, and property damage arising from the issuance of the license or activities conducted pursuant to the license.
  • Superhost Tip: Wondering how much short-term rental insurance costs? Get a quote and protect your property today.
• Floor Plan: A floor plan of the entire dwelling unit with every room properly labeled with information and content.
• More Information: For detailed information and resources, visit the City of Chicago’s Short-Term Rental page.

What Chicago’s General Liability Requirement Means for STR hosts:  

Chicago requires hosts to secure commercial general liability. Why is that? It’s because short-term rentals are a business and require business insurance to protect them. Commercial general liability is the only appropriate liability coverage for short-term rental properties. This type of liability is found in business insurance policies and protects the insured against claims of bodily injury or property damage they could be found legally liable. It’s the most comprehensive liability insurance one can purchase. 

With Chicago’s insurance requirement, hosts must list the City as additional insured on their short-term rental insurance policy. This is common in the insurance world. It’s through this addition that the interested entity is afforded liability coverage. Without this “additional insured” requirement for coverage, it’s unlikely the City has any protection in the event a plaintiff names them as a defendant in relation to bodily injury or property damage arising out of short-term rentals in the City.   

Chicago’s requirement not only protects the City, but also ensures the hosts have the correct and best insurance for their short-term rental business. Other hospitality entities, including bed and breakfasts and hotels, carry Commercial General Liability; short-term rental properties should be no different.