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If you do not have short term rental insurance on your Airbnb, you need to start a plan. Having the right insurance can save you from a multitude of problems later on and will ultimately protect you and your property.
So Do You Need Additional Insurance for Airbnb?
The Airbnb Protection Program (provided by Airbnb) is great at covering the bare minimum when it comes to insurance, but that is not enough. You need dedicated short term rental insurance (not your standard homeowner’s insurance) that will insure both home and business activities.
What is the Airbnb Protection Program?
Airbnb offers Host Protection Insurance, which gives Airbnb hosts liability insurance of up to $1 million, which is intended to protect against third-party claims of personal injury or property damage. It is available for every booking but does not cover property damage from a long list of items.
Those eligible for the program are accommodations or the property controlled by the Airbnb host that has been listed and booked, and Airbnb hosts and those who are delivering host-related services on behalf of the host, which includes full or part-time staff, family members, and even roommates.
Also, the program only covers actual stays, so to be protected, there has to be an actual Airbnb stay in progress, which excludes canceled stays and no-shows.
While this program is a nice backup, as mentioned earlier, it does not protect against many things such as:
- Loss of income
- Intentional injuries or damages (i.e. non-accidents)
- Damages from assault
- Chinese drywall
- Fungi or bacteria
- Product recalls
- Silica, silica dust, lead, and asbestos
Another program that Airbnb has in place is the Airbnb’s Host Guarantee, which essentially covers damages to the property (including possessions in the rental.) It differs from the protection insurance in that it is meant just to cover damages to material possessions and the property.
However, the program does not cover damages to common areas like a lobby that is not a part of the actual listing, damages caused by a pet, ordinary wear and tear, or cash and securities.
Essentially, these are programs that are intended to protect hosts when someone makes a claim against you, where claim adjusters under the insurance company (Lloyd’s of London and Zurich Insurance plc) are administered and resolved under the policies agreed to with Airbnb.
Check Out This Rental Recon Article: Airbnb Essentials: 75+ Items Every Host Should Have For Guests
Is Insurance Provided by Airbnb Sufficient?
While this insurance program is great in adding an extra layer of protection to those hosting Airbnb homes, it is probably not sufficient enough to protect not only you as an Airbnb host but also your home.
There a multitude of things you could need protection against when doing business as an Airbnb host. Understand that even though the program guards against a few more common things under the classification of personal injury and property damage, there are still many things it does not protect against.
Most of those items on the not protected list are less common, but can still happen, and would be extremely stressful to deal with if you did not have the proper protection.
What Protection Do I Need?
Unfortunately, standard homeowner’s insurance can get extremely tricky when dealing with Airbnb rentals due to the business exclusion language in standard policies, which means in most cases it will not be allowed.
The Host Protection Insurance acts as primary coverage, so other insurance policies will not be used for claims that are covered under the program.
As an Airbnb host, it is crucial that you have plenty of protection, as you are having many people come in and out of your rental. While normally things run smoothly, you do not want to run into the issue of an incident occurring and have to deal with the stressful aftermath.
Having the appropriate insurance safeguards, you against these kinds of situations that the Airbnb programs do not fully protect against. It is important to find what works best for you. Check out our best insurance options for hosts here.
A step I have taken as an Airbnb Superhost has been to insure myself with Proper Insurance. They are the leading short-term rental insurance that has over 30,000 policies that are applicable in all 50 states.
It is also backed by Lloyd’s of London (which is what the Airbnb Host Protection Program is through) and covers many types of vacation homes.
My favorite thing about them is that they were able to make a specific policy for me, tailored to my rentals.
The insurance policy under Proper Insurance acts as a business policy and gives you comprehensive coverage, as well as replaces your current homeowners or landlord policy. It even includes personal liability when your Airbnb also acts as your primary residence.
Unlike the Airbnb Protection Program, Proper’s coverage includes a wide range of extremely useful things:
- Replacement of cost valuation on both new and old buildings
- Bed bug extermination and loss income
- Full ordinance of law
- Debris removal
- Loss assessment
- Back-up sewers and drains
- Unscheduled structures
They can tailor a policy to your specific rental, some of which include there is no limit on damages caused by renters, no limit on theft, and the vacancy clause was removed.
They offer business income coverage, which protects you in the event of covered insurance losses like fire damage. These incidents would deem your Airbnb home un-rentable, and at that point, this coverage would pay for lost revenue during the time of repairs.
Another great thing is they remove preset limits, so you can get a much higher level of coverage than with other short-term rental insurance plans.
How it Works With the Airbnb Programs
One of the biggest reasons that it is difficult to pair regular homeowner insurance with Airbnbs is that Airbnbs usually follow the “triple use” model – a term used for the different periods Airbnbs go through: short-term renting, personal use, and unoccupied.
As you can imagine, the uncertainty this brings makes it difficult to pair with insurance.
One thing Proper Insurance does that has been a huge help for me as an Airbnb host is that occupancy restrictions do not exist, and neither does a vacancy clause. That means my Airbnb home is covered at all points in the triple use model.
The reality is that hosting an Airbnb home is a huge risk. Not only is the property itself a financial asset that needs to be protected, but if a guest is accidentally hurt during their stay, you could be facing a lawsuit.
No one wants to think about that happening, and most of the time it does not, but the truth is, you want to be covered if it does.
It can be hard to pinpoint exactly what you would need, as Proper Insurance offers many flexible plans catered to your specific situation, so it is best advised that you get a quote directly from Proper Insurance to see what works best for you.
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Rental Recon Tips:
- Even if you live on-site at your Airbnb, use your Airbnb property as your primary residence, or are even just renting out a room, you should still get an insurance plan to cover you and your Airbnb.
- Check with your homeowners insruance agent before starting to host. As mentioned earlier, most, if not all, policies do not work with Airbnb hosting.
- Be sure to check with your mortgage provider before you take the next steps in becoming an Airbnb host. Not informing your mortgage provider could result in many additional fees and other troubles.
- Be sure to check with your landlord before taking the next steps to become an Airbnb host. Many leases will not allow you to rent out units, homes, or rooms.
Does Airbnb Invalidate Insurance?
The Airbnb Host Protection Program, The Experience Protection Insurance, and the Airbnb Host Guarantee do not always invalidate insurances since they are policies and programs put in to place to cover a bare minimum on Airbnb hosts and their property.
While one does not cancel out the other, they are not full coverage programs. You should still get the right type of insurance for your rental.
How Much Does Airbnb Insurance Cost?
The average cost of insuring yourself and your Airbnb home will differ on a case-by-case basis, but the average cost lands somewhere around 15% to 20% higher than what homeowner’s insurance would be for the property. Some factors that influence the price are:
• Your deductible
• Replacement cost value (if your property is worth more, you will have a higher-priced insurance policy)
• Location – if a property is in a more expensive city, like New York City or Chicago, expect the policy to also be higher
• Amenities such as a pool or fireplace, and how often your property is rented out