Do Hosts Need Airbnb Insurance?

Real estate has always been one of the top avenues to success. Those who own property tend to have a leg up in society going back through ancient history.

Today, savvy investors are using Airbnb to boost their passive income streams, and so can you. As a host, you’ll rent out your home, or part of it, on the company’s platform.

It’s effective and lucrative, especially if the property is in a high-demand area. However, many potential hosts are concerned about the safety of their homes, and rightly so. Airbnb vets the renters somewhat, but ultimately, the risks are on your shoulders.

That’s why many hosts choose to take out insurance as a protective measure.

What type of insurance should you have as an Airbnb host, and are any policies essential? We’ll answer those questions and more for you in this article.

What Does an Airbnb Host Do?

What do you picture the life of an Airbnb host looks like?

If it’s all rainbows and flowers and a waterfall of passive income, you may need to revamp your vision a little.

Yes, there are incredible benefits to hosting an Airbnb property, but there’s also a lot of work and responsibility.

Before you decide that this is your next career or side gig, let’s delve into the role of an Airbnb host.

Rules, Regulations, and Responsibilities

Keep in mind:

Airbnb is a global, multi-billion dollar company with millions of people watching them for high-profile mistakes.

So, it makes sense that the corporation is picky about the people who rent out rooms and homes while representing their name.

One thing Airbnb is clear about — communication is vital.

As a host, you’ll need to have professional, polite, and prompt responses to inquiries and problems.

Safety and Security Measures

That’s the primary host responsibility, but you also need to prepare your property for a safe and secure rental.

Check out these general hosting rules to make sure your home passes the Airbnb requirements:

• Be clear about what you’re renting out. Rooms shouldn’t have shared access space unless stated on your listing, and even then, it should be as minimal as possible.
• Homes should have a lock for the exterior door and a defined plan to get the key or PIN to the guest. You should reset PIN codes for each guest.
• You should not hide security or surveillance cameras. Guests must know where each camera is before they stay at the residence.
• Working fire extinguishers are easy to locate and accessible.
• Rentals should have a working smoke and carbon monoxide alarm. Airbnb provides one free for each active host upon request.

The rest of the safety precautions are up to you and will depend on whether you’re sharing space with the guest or not.

Renting Out Your Rental

You have too much space in your rental, and you’d like to make some money off of it instead of letting it go to waste.

Can you be an Airbnb host?

The truth is that Airbnb doesn’t care if you’re the owner or renter. However, your insurance company or property manager might not be so blasé about your side income.

Before listing your spare room, check if your lease/renter’s insurance policy allows business activity in general. (And Airbnb or other vacation rentals in particular.)

You could end up in a legal mess with substantial personal liability if your lease says no to outside temporary tenants.

See also: How to Get Disability Insurance When You’re Self Employed

Does Airbnb Provide Insurance Coverage?

Airbnb’s security measures include Airbnb Host Protection Insurance and a Host Guarantee — the company’s version of liability insurance. These are free benefits that come with the AirCover package. Hosts automatically get them unless they opt out.

AirCover acts like insurance, but it’s not intended to be a substitute for the host’s policy. This host damage protection doesn’t include everything.

AirCover Protection

The Airbnb insurance policy is an indirect form of security. It provides peace of mind to hosts and guests, but AirCover’s protection is limited.

Host liability insurance gives you $1 million in coverage if a guest is hurt or has their property stolen or damaged while they’re renting from you.

If the guest files a lawsuit against you, and you’re found legally liable the host insurance covers:

• Bodily injury occurring on your property
• Damage to someone’s personal belongings on your property
• Theft of valuables while the guest is a temporary resident in your home
• Guest damages to common areas around your home caused by vandalism or accidents

However, AirCover does not protect you from the costs of damages or injuries done to others or your home intentionally, such as a fight or arson. There are other exclusions, as well. In short, you should look at the AirCover benefit as a means of protecting Airbnb’s reputation and bottom line, not yours or your Airbnb rental.

A financially savvy host never considers the Airbnb policy their only insurance coverage protection.

Does Your Homeowners Insurance Cover Airbnb?

The AirCover policy is a lightweight blanket taking care of your guests during their short-term rental. The actual coverage is in your hands.

So what policy protects you, not Airbnb?

You might assume it’s your homeowner’s insurance, but that’s not necessarily true. Here we’ll take a look into these policies further.

How Homeowner’s Policies and Airbnb Work Together

If you own a home, you likely already have a homeowners insurance policy. The coverage is mandatory when you take out a mortgage. The lender requires a policy that protects their investment against property damage.

Now, insurance providers have caught on to the Airbnb craze. Many policies include caveats that cancel the insurer’s responsibility if a renter causes the damage.

What to Look for in Your Policy Terms

Go ahead and grab your insurance policy, or sign in to your account online and pull it up. Most of us don’t read the terms and conditions. We skim them, listen to the agent summarize it all for us, then sign and initial in the highlighted areas.

As a potential host, you must know what insurance coverage you have. So it’s time to get out the magnifying glasses and read through the legalese.

You’re looking for the part that lists the coverage and exclusions the insurer clarifies. Chances are, there’s a section that deals explicitly with short-term rentals or home-sharing for property owners. The policy likely doesn’t say “Airbnb” because there are other companies that work the same way, like VRBO.

If the policy excludes short-term rentals, you can call your agent or insurer and request an endorsement or a home-sharing insurance policy.

Home-Sharing Policies

Renting out your home regularly, as Airbnb hosts do, is a business activity. Most insurance companies exclude damage caused in the line of business from their coverage. To compromise, companies created home-sharing insurance.

These policies typically cover everything previously nullified in your homeowner’s insurance because of the business aspect. There’s no need to worry differently about guests’ bodily injury and property damage than you would if you lived in the home and damaged it yourself.

It will cost a little extra each month, but it’s worth it if you can host and have protection that fills in the gaps the AirCover policy leaves out.

You may also like: How to Get a Mortgage for Freelancers

What Other Coverage Should a Host Carry?

Homeowner’s and home-sharing coverage is your main line of protection. These policies cover many problems, but there are gaps, as with every insurance coverage.

You may have 80% of the issues taken care of between AirCover and your homeowner’s policy, but what about the other 20%?

Extra Protection for Your Airbnb

There are other types of additional coverage that you can add on with most insurance carriers. As a host, consider carrying these extra insurance products.

Landlord Insurance

As an Airbnb host, you’re also a landlord. There’s a type of coverage called landlord insurance that combines property and casualty insurance. This protects you, your tenant, and anyone you hire to care for your property.

A landlord policy steps in when your home is damaged, and you can’t rent your property. You’re out the rental income you could have made while the damages are repaired or replaced … unless you have landlord insurance.

Talk to your insurance agent to ensure your policy includes short-term rental insurance for bookings under thirty days; otherwise, it’s not beneficial for most guest stays.

Commercial Property Insurance

Commercial property insurance is for businesses, and as a consistent Airbnb host, you are now a business owner.

Consider investing in commercial insurance coverage instead of home-sharing policies if you don’t live on the property you’re renting to guests. It covers liability and property and lets you have regular business activity without limitations.

Umbrella Policies

Commercial and landlord insurance on top of your homeowner’s and AirCover brings you much closer to a 100% protection rate. Still, a few loopholes exist, leaving you uncovered or responsible for excess damages.

Umbrella policies extend liability coverage for anything over the policy limits. Say a guest were to sustain a severe injury on your property and the court awards them more than your policy covers. You would have to pay the excess unless you had an umbrella term in effect.

If you have multiple Airbnb properties, you can include them all under one umbrella policy, even if they’re in different cities and states. The coverage is usually inexpensive since it’s rarely enforced. For a few extra dollars a month, you can close the gaps in your legal liabilities a little more.

Related: Who Needs Self-Employed Business Insurance?

Cover Your Bases With a Contract

As a host, you may require your guests to sign a contract or rental agreement that enforces rules individual to your property. You can’t force guests to sign the contract, but you can deny the rental if they choose not to.

These documents are a way that you can legally enforce rules Airbnb may have missed. For example, if you have a hot tub, you may include a rule that children under 13 can’t use it. If a child is injured because they broke the rule, the contract might be enough to help minimize your responsibility in a liability claim.

However, writing contracts isn’t something that comes naturally to most of us. That’s where Selfgood can help.

Selfgood’s Extensive Membership Benefits

Selfgood is a platform specially created for gig workers, entrepreneurs, and small business owners like Airbnb hosts. A membership with Selfgood provides you with access to discounted legal services, including contract template creation.

Check with Selfgood’s legal aid team before having guests sign your contract or rental agreement to ensure it’s enforceable.

While you’re at it, give the rest of your Selfgood membership a scan.

You’ll see that it gives you benefits such as:

• Indemnity health insurance options
• Financial coaching
• Discounts at hundreds of companies across the country
• And much more!

Wondering how to register your new side hustle? Read: How Should You Register a Gig Business? Are You a Sole Proprietor, LLC, or Independent Contractor?

Conclusion

When you’re ready to start making income off that unused space in your home or extra rental property, Airbnb is a brilliant opportunity.

Protect yourself, your Airbnb guests, and your personal property by investing in the right insurance coverage. Then, use Selfgood to close the legal gaps as you reap the benefits of your new (mostly) passive income.