What is Airbnb insurance, and how does it work?

Airbnb has disrupted the hotel and hospitality industry, giving private homeowners the ability to rent out their homes to travellers looking for a deal, or an off-the-beaten-path place to stay.

But, if you intend to become an Airbnb host, you’ll first need to protect your assets and acquire insurance for your property, just like you would for other large assets you own.

Airbnb provides different forms of insurance for both guests and hosts. Host liability insurance, a part of ‘AirCover for Hosts,’ provides Airbnb hosts with US$1 million in liability coverage. It applies if you are found legally responsible for your guest getting hurt or their belongings being damaged or stolen while they’re staying at your property. You can also get US$3million in coverage for damage protection.

AirCover for Hosts works as a no-opt-in program. By listing your property on Airbnb, you are automatically enrolled in their insurance program and are provided benefits for free.

If you wish, you can opt out of their program, but you must do so in writing.

Filing a claim is relatively easy and can be done through Airbnb’s official website.

What type of insurance coverage does Airbnb provide to homeowners?

Airbnb hosts are able to receive two types of coverage as part of their insurance package.

AirCover for Hosts provides homeowners with US$3 million in damage protection which covers the cost of damage caused to the property by Airbnb guests.

Liability insurance is also included as part of Airbnb’s AirCover for Hosts with US$1 million in third-party liability insurance, which generally includes injuries caused to guests while on your property or if a guest caused damage to a common area or nearby property.

Why do you need extra home insurance, along with Airbnb insurance?

Most standard home insurance policies don’t include coverage for short-term or even long-term rentals. And without any coverage, you could be liable for injury or have to pay out of pocket for damages.

That said, there are companies that offer insurance to Airbnb hosts. Through them, you can get coverage for:

• Commercial General Liability (CGL) insurance. This protects you against third-party property damage or injuries. CGL may provide financial coverage for third-party medical expenses and your legal fees if you are named in a lawsuit.
• Commercial property insurance. This protects against things like fire, theft or vandalism. It typically includes coverage for the property’s physical assets such as your furniture and personal belongings.
• Rental income. This type of coverage provides you with protection if you lose rental income due to damages to your property because of a fire, flood or another insured peril.
• Loss assessment coverage. If the property is a condo, which has shared spaces, and a claim is made against the condominium corporation that exceeds its insurance policy limit – this will provide some coverage.
• Contingent unit coverage. Contingent unit coverage protects your condo unit. In cases where your condominium corporation has no insurance on your unit, lacks sufficient coverage, or the corporation’s policy does not cover the peril that occurred, adding contingent unit coverage to your policy may protect you from those damages.
• Cyber liability insurance. This provides coverage in case of cybercrime involving your technology systems and customers’ data.

That’s why speaking with your insurance provider, and informing them of your intentions, will allow you to receive the extra insurance you need to cover all your protection needs.

You can let them know that your home (or the property you are listing) is being used for commercial purposes. This will allow you to receive the extra coverage that Airbnb is not providing, giving you maximum protection for your property. Not being protected could become very costly if any damage occurs.

What are the common risks that Airbnb hosts face?

While becoming an Airbnb host can provide extra income and the satisfaction of running your own business. There are risks you should be aware of that are common to most hosts. They include:

• Property damage. Guests don’t always treat their rentals as they would their own property. There is always a potential for things to break from misuse or from wear and tear over time.
• Theft of personal belongings. Some guests have sticky fingers and will take things not nailed to the walls. It’s easy enough to report them, but there is no guarantee you will see that stolen merchandise ever again.
• Squatters. Renters have been known to overstay their welcomes and take extra unpaid time on your property. You can try to limit stays to help prevent this.
• Injury. Accidents happen, but if someone gets hurt on your property, they are likely to file a claim or lawsuit against you. It’s important to make sure your property is well-maintained, signs are posted where necessary, and that you have the right insurance coverage to prevent economic losses on your part.
• Personal safety. If you live on or near the property you are renting, there is a risk of personal safety from strangers living in your home.

If you still have questions, check out our complete guide to renting out your home on Airbnb.