Home Sharing and Airbnb: Which Insurance Is Best?

Did you know that Airbnb spends an average of $50 million each year on payouts to hosts and guests who have had negative experiences? For guests, this includes alternative accommodations and even dog counseling sessions. For hosts, this includes covering the costs for repairs.

However, Airbnb payout may not be enough for your needs. Home sharing on Airbnb is a great way to get some additional income and use some extra space that you have in your home, but it also comes with its share of risks and unruly guests.

You can protect yourself from the risks of home sharing with the right insurance that covers the cost of damages and third-party liability. Read on to learn more about the best insurance for home sharing.

Potential Insurance Gaps

The first question you’re probably asking yourself is whether your homeowners insurance coverage is enough. It depends on the terms and conditions of your coverage. In most cases, there are limits to what your homeowners insurance will protect you from.

Homeowners insurance is designed to protect your home from natural disasters or unexpected events. It does not take commercial events into account and may not cover property damage from home sharing. For example, you may be restricted in the number of weeks in a year that you can rent your property out.

If you own a home that is only for renting out, homeowners insurance will not cover you for any damages caused by guests when Airbnb parties get out of control. An Airbnb host suffered $150,000 in damages when a guest threw a party with over 100 people in attendance. They left the house smelling like marijuana, cigarettes, beer, and vomit, with blood and vomit stains on the walls, towels, and bedding.

Your Airbnb coverage may not cover the total amount of damages you incur. If you are renting your home through Airbnb, contact your insurance broker to review your current homeowners or renters insurance policy. Take a look at the terms and conditions of your policy to confirm your coverage.

Issues with Airbnb’s Provided Protection

Airbnb provides a certain amount of coverage: host guarantee program and host protection program. Airbnb free coverage is not meant to be a replacement for home sharing insurance but is supplementary. The claims process is tedious and time-consuming, so you’ll want to keep this in mind as well.

Host Guarantee

Airbnb Host Guarantee covers you for up to $1 million in property damage caused by guests, cleaning costs, and costs of cancellation by guests. Before you breathe a sigh of relief, know that there is a lengthy list of terms, conditions, and exclusions that may cause your claim being denied.

In most cases, general wear and tear to the property do not fall within any insurance coverage. Airbnb insurance does not cover damage because of natural disasters like hail or floods, so you will need separate insurance to protect yourself, especially if you live in an area prone to natural disasters.

If you are considering making a claim under the host guarantee, you will have to provide evidence that your guest was directly responsible for the damage. This may be difficult to do unless you have security camera footage or some clear evidence. It will also take some time to get a full response from Airbnb, so you may be stuck dealing with the expenses on your own.

There are also certain steps and deadlines you have to take into account. For example, you first need to contact the guest and try to get reimbursed. It can be very difficult to get reimbursement for damages from a previous guest if your next guest has already checked in.

You will also only receive the actual cash value of the property that’s damaged. So even if you paid $2,000 for that TV, you’ll only get back what it’s worth today. Getting additional insurance to supplement Airbnb coverage is essential to make sure you are fully protected.

Host Protection Insurance

Airbnb also offers host protection insurance which can cover you if a guest gets hurt on your property or their belongings are damaged. Remember that Airbnb insurance does not cover intentional damage, defamation, bed bugs, or mold. To protect yourself from these issues, you will need additional coverage.

As with any insurance coverage, the fine print sets out the terms and conditions. Unfortunately, the policy of Airbnb insurance is not easy to find and can lead to your claim getting declined. If that’s the case, you may be stuck paying legal costs and medical expenses for your injured guests, which can be quite a substantial amount.

Considerations for Condo Owners and Renters

If you have a condo and are considering home sharing, make sure to do your due diligence so you understand the rules applicable to you. Most condos have bylaws that set out the rules and restrictions that apply to all owners and tenants. Given the security issues with Airbnb, many condos have restrictions on short-term rentals for up to 30 days or even 6-months.

If you are a tenant looking to put your property on Airbnb, review your lease agreement. Many agreements contain restrictions on assignments and short-term rentals. You will need to contact your landlord to get permission for home sharing.

If you choose to rent your property out with these restrictions in place, you will be violating various agreements. You can get evicted or even sued for violating these rules.

Request a Quote for Home Sharing Insurance

Now you know what types of home sharing insurance you need to consider. The type of coverage and insurance rates depend on various factors, including the size of your property, the location, and prior experience with guests. Working with an experienced insurance agent can help you get the best insurance rate.

Contact us today to request your quote. We will work to find the best insurance rates for your Airbnb and home sharing business. We act as your agent and your advocate, so you can have peace of mind with us by your side.