Does Your Homeowners Insurance Cover Airbnb? What You Need to Know BEFORE You HostHomeowners Fridays
If you own a home, you likely
understand the importance of homeowners insurance. You might not understand
exactly what it covers, however. Exclusions in the policy could leave you on
the hook for major expenses, especially if you’re renting out your home using
Airbnb or a similar service.
The Rise of Peer-to-Peer House Rentals
Airbnb is not the only company to provide peer-to-peer house rentals, but it is probably the best known. Competitors include Flipkey and HomeAway.
An alternative to traditional hotels, Airbnb started in San Francisco in 2008. Since then, the company has expanded globally. People can sign up to be hosts. They list their home on the website and app, along with the price, date of availability and other rules. Then others can book the home as guests.
It’s become a convenient way for property owners to make a side income, but this does not mean it’s without risk
Hosting Gone Wrong
Hosts are allowed to establish rules for their properties, but this doesn’t guarantee the guests will always obey. Although some guests are well-behaved, others take advantage of the situation and throw wild parties. An Airbnb host in Ohio was left with expensive property damage after a party turned violent and a shooting took place at her property.
Other guests are actually thieves looking for easy access to their next target. A couple in Georgia experienced this firsthand when an Airbnb guest stole their television and other belongings.
Even guests with good intentions could cause major damage. They could accidentally leave the stove on and start a fire, for example. There’s also a risk that guests will injure themselves – for example, by tripping over a loose tile or hitting a sharp counter – and sue you for medical expenses.
Airbnb hosts face considerable risks, so they need good insurance. However, regular homeowners insurance policies may not provide coverage.
Standard homeowners policies are designed to cover the normal risks experienced by regular homeowners. These policies are not designed to cover commercial activities, which tend to have much higher risks associated with them. For this reason, homeowners policies often exclude commercial activities, including short-term rentals using peer-to-peer property sharing sites.
However, the rise of Airbnb and its competitors has necessitated some changes. Some insurers have responded to the new demand by creating policies with coverage for short-term rentals. But don’t just assume that you’re covered. Talk to an insurer about your Airbnb activity and make sure your policy includes coverage. Also, because the risks are higher, you should expect to pay more.
Some peer-to-peer rental sites offer their own insurance coverage, as well. According to the official website, Airbnb provides some insurance coverage, which includes $1,000,000 in property damage protection and $1,000,000 in coverage against accidents. Some other peer-to-peer rental companies may offer similar coverage, but it’s important to read the details and to make sure you understand the requirements and exclusions.
Also, you still need to maintain your own homeowners policy. The insurance that Airbnb provides only covers specific risks related to your Airbnb rentals. It does not replace your primary homeowners insurance policy.
Some insurers are more willing to work with Airbnb hosts than others, so you may need to shop around for a good fit. Do not try to keep your hosting activity from your insurer, as this could result in the cancellation of your policy and the denial of any claims.
When was the last time you reviewed your homeowners insurance? If it’s been more than six months, contact an agent at Insurance Line One for a homeowners insurance quote and coverage review.