In today’s world, technology has made it easier than ever to help create extra income from hosting your home, or secondary property on short-term rental sites like Airbnb.

This platform has helped to turn unused or underused spaces into income generating properties for their owners while creating the largest online purveyors of lodging in the world!

Unfortunately, most forget the impact that hosting short-term rentals has on their personal insurance policies.

3 Reasons Why Your Homeowner’s Insurance Will Not Cover Short-Term Rental Claims

  1. Homeowners Insurance is a personal insurance product. Short term rentals (Airbnb, VRBO, etc.) are considered commercial risks in the insurance world. This makes these types of properties ineligible for coverage.
  2. Potential losses can’t be easily identified. Currently, the short-term rental market is still very new. This makes it hard for insurance companies to predict the size and scope of potential claims. It could take several more years before traditional insurance companies will start including short-term rental use in their homeowner’s insurance policies.
  3. Insurance companies will have to update the insurance contract. This will be a costly process for insurance companies since the process requires approval from every state in which the company offers homeowners insurance. This issue is probably the most likely issue why insurance carriers have not moved faster for accommodating for short-term rentals for Airbnb hosts.

Does Airbnb cover my home in case it is damaged by guests?

Airbnb provides Host Protection Insurance and has a Host Guarantee. Let’s take a closer look at what Airbnb provides that your homeowner’s insurance excludes.

Airbnb Host Protection Insurance

This is an actual commercial general liability policy that provides up to $1,000,000 of coverage for liability claims that do not result in damage to the host’s own property. An example of a potential loss could be a fire caused by a guest that damages your neighbor’s penthouse causing $300,000 loss. You can view the actual Airbnb Host Protection Insurance here. (link to pdf summary should we require email address to open document)

Key Points about Airbnb Host Protection Insurance:

  1. There is no additional cost to the host for the coverage.
  2. Claims will be handled by professional insurance claims adjusters.
  3. Airbnb does a good job of ensuring their hosts have protection from liability losses.
  4. The only negative would be you are limited to a $1,000,000 limit. If you are legally liable for burning down your apartment/condominium building, $1,000,000 would not be enough coverage.

Airbnb Host Guarantee

This is a “Guarantee” from Airbnb that they will pay up to $1,000,000 in property damages to your property that is caused by a guest. View the Airbnb Host Guarantee now.

Key Points about Airbnb Host Guarantee:

  1. This is just a promise, not actual insurance provided. Airbnb specifically mentions that you still must have your own personal insurance policy.
  2. You must file a claim with your insurance company first before you can contact Airbnb. This could potentially increase the time it takes before you can have your damage repaired.
  3. Collectables, fine arts, and jewelry are excluded. If you don’t have these items insured under your homeowners, property, or collectibles insurance policy, no coverage will exist. Airbnb actually recommends on their website that you put these items in a safe place prior to guests arriving.
  4. If you go through the process of utilizing the “Host Guarantee”, you waive your rights to a class action lawsuit. If you already have to waive your rights to enter into the process, what are the chances you will be satisfied with a settlement?

Does an insurance policy exist that would provide for short-term rentals such as Airbnb?

Fortunately, a few insurance companies have created a program that combines homeowners and property insurance with short-term rental coverage for Airbnb hosts.

Key Points about Short Term Rental Insurance for Airbnb Hosts:

  1. This insurance policy has your traditional home insurance coverages, with short-term rental insurance included. This policy will replace your current homeowners or property policy.
  2. Claims are handled on a primary basis, which means a quick turnaround for your claim to get paid.
  3. You have the ability to ensure the property for the amount of coverage you want and for replacement of your home or rental policy.
  4. Cost is affordable and runs about 20-30% more than what you are currently paying. However, you are properly covered by using your property as a short-term rental.

The takeaway from our discussion is you MUST have a short-term rental policy if you want to host with Airbnb or any other short-term rental site. Airbnb has gone to great lengths to provide some protection for their hosts and should be appreciated for doing so. Your next step should be having a conversation with your current insurance agent to make sure you obtain the proper insurance coverage for Airbnb hosts. If you would like for us to provide you with a quote or even more information on short-term rental insurance, please complete our short “Get a Quote” form.