Air bnb Insurance Review: Do I need liability insurance?

Brady O'RourkeSeptember 18, 2019

There are over 6 million Airbnb listings worldwide, and if you’re planning to add your home to the growing market, then you already understand the importance of preparation. Fresh linens? Check. Extra towels? Check. Wi-Fi password prominently displayed? Check. Liability insurance? If you’re not thinking, “Double check,” then it’s time to roll up your sleeves and get down to business. 

Insurance isn’t the most exciting topic to discuss, but it’s a necessity. As a short-term rental host, you always need to expect the unexpected. It simply goes with the territory. Accidents, although rare, do happen. It’s better to exercise caution and prepare for the worst-case scenario than be blindsided by an unexpected event or injury. 

Luckily for short-term rental owners, Airbnb offers Host Protection Insurance, which is automatically included with every booking. All hosts (and landlords, if they’re named in a lawsuit) receive primary liability coverage against a third party’s claims of up to $1 million. This program covers accidental bodily injuries as well as property damages. There are, however, a few caveats.

What is included in Airbnb’s Host Protection Insurance?

  • Property damage in common areas, like a building’s lobby, is covered.
  • Accidental injuries. As an example, if a guest slips on your rug, breaks her wrist, and files a claim, you’re covered. Another example is if an Airbnb renter sustains an injury after falling off a broken treadmill in an apartment complex’s gym. If he decides to file a claim against the host and the building’s landlord, it’s covered.
  • In addition to hosts, landlords and homeowner associations are covered in most cases. 

What is not included?

  • Any loss or expense caused either directly or indirectly by an assault and/or battery. 
  • Injury or property damage arising from the presence of fungi or bacteria on or in a building is not covered. The same goes for the presence of asbestos, lead, silica, silica dust, bed bugs, and pollution.
  • Damage or injury sustained from an intentional act. Airbnb is aware that accidents happen, but they are not liable for something done on purpose. 
  • You are only entitled to coverage within the constraints of your guests’ booked stay. If they arrive early or stay past the scheduled check-out time and damage or injuries occur, you are not protected. 
  • Cash and securities, collectibles, rare artwork, jewelry, and pets are not covered.

This is not a complete list. For a comprehensive program summary of Airbnb’s Host Protection Insurance, click here. 

If you need to file an insurance claim, reach out to Airbnb and they will connect you with their third-party claims administrator.

Airbnb also has a Host Guarantee in place. This covers up to $1 million of damage inflicted upon your personal property by guests. However, it is simply an agreement, not actual insurance. Airbnb strongly encourages you to purchase third-party insurance in case your loss is not within the terms of the Host Guarantee.

To cover all the bases, consider protecting yourself and your rental home with liability insurance or short-term rental insurance. That way you can rest assured that you have the proper protection on the off chance something goes wrong. After all, it’s better to be safe than sorry. 

Keep in mind that even if you already have homeowners or renters insurance policies in place, they aren’t designed to cover rental properties. This unfortunately results in significant coverage gaps. 

 “It is common that home insurance policies explicitly exclude activities associated with short-term rentals,” Airbnb Superhost and blogger David Cross said.

If your property is rented out to guests year-round, you most likely have landlord insurance, but be careful. These plans frequently exclude short-term rentals.  

“Not all landlord policies apply to short-term rentals,” Brad Goldsberry, an insurance solutions finder, said. “Though the coverages might be the same, a normal landlord policy has not priced in the increased risk you have with a short-term rental.”

Liability insurance provides coverage that often isn’t included in other policies. These plans protect you and your rental space in the event of an accident, mistake, or lawsuit. They are generally affordable and come in handy in an emergency situation. 

The specific insurance you need depends on what provider you choose to work with and how often you rent out your space. You’ll want a comprehensive plan that covers both liability and property damage specifically for short-term rentals and guests. Some companies offer homesharing insurance or vacation rental insurance. Others add a short-term rental liability provision to current plans to extend coverage to a policyholder’s Airbnb. 

For example, Progressive has homeshare insurance provided by a third-party called Slice. The flexible plan only charges you for the days your rental space is booked. American Family Insurance’s Temporary Rental Insurance offers coverage for rental property damage and theft protection. ISO (Insurance Service Offices), a subsidiary of Verisk Analytics, provides options specifically for homeowners renting their spaces online. The coverage includes liability, theft, vandalism, and property damage.

To prevent gaps in coverage and ensure you’re as thorough as possible, have a conversation with your insurance agent. He or she can help you pick the right plan that is all-encompassing and provides you with the desired level of protection.

Each insurance carrier has different rates, requirements, and options, so feel free to get a variety of quotes and research multiple places to find the right deal.

Above all, it’s crucial that you communicate openly and honestly with your insurance company about your specific situation. If you have homeowners insurance and neglect to disclose your plans to rent the space, your entire policy could become void because of the failure to reveal the real use of the home, and/or because of the material change in the risk.

In a perfect world, insurance is unnecessary and everything runs smoothly without the fear of accidents, damage, or injuries. As we all know, that’s unfortunately not the case. However, once you’re armed with protection from Airbnb’s insurance and your own liability or homesharing coverage, you can confidently run a successful rental business. Happy renting!

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