From ride-sharing to peer-to-peer lending, there is a phenomenon taking place in our economy – one that makes it easier to own less and cut out dealings with traditional business institutions. One area where collaborative economics have especially grown is in ‘space-sharing.’ Using cloud-based platforms like Airbnb, a person with an extra room, apartment or even an entire home can ‘share’ that space with people who are looking for affordable, short-term rental solutions. It’s a win-win. The renter gets access to affordable housing while the owner generates revenue from unused space.
Of course, most financial opportunities come with a certain amount of risk. When you sublet or rent out your space, you become a landlord and thus responsible for any problems or incidents that may occur during the rental period. The question is: Where do Airbnb rental claims fall on the insurance spectrum? Do you turn to your homeowner’s insurance? Will Airbnb pick up the bill for damages? Do you need business insurance?
Understanding Your Homeowners Insurance
Home insurance policies often include language that limits protection when you run a business from your home or generate revenue from a renter. If it is a one-time, short-term stay, the insurer may extend coverage or allow for an endorsement to your insurance policy that covers damages and liability. If you are regularly renting out your space, however, your coverage may be partially or totally void. That could call for a separate business insurance policy or perhaps even a landlord or rental dwelling policy if you are leasing an entire property on Airbnb.
Airbnb May Provide Limited Coverage
The good news is that Airbnb offers certain types of protection for rental hosts. The bad news is this protection is very limited, and a portion of it is not considered insurance at all – only a ‘guarantee.’
Airbnb Liability Insurance
Airbnb Liability Insurance is actual insurance that is designed to pay for third-party injuries and property damages for which you are liable as a result of renting your space on Airbnb. While it may not cover damages and injuries caused by most known pre-existing property conditions, such as mold or property components in need of repair, you may be able to file a claim for a neighbor’s property damages if your guest accidentally floods your condo and causes water damage to adjacent units.
Airbnb Host Guarantee
The Host Guarantee is an assurance that Airbnb provides to property hosts. It facilitates payment to the host for third-party damages to the host property so long as the damages meet Airbnb’s guidelines for payment. However, the company stops short of calling it insurance and even emphasizes the need for host property insurance despite offering a Host Guarantee.
Should You Become an Airbnb Host?
Your independent insurance agent can help you better understand how your insurance could be affected by space-sharing. Even if you understand the insurance implications associated with hosting on Airbnb, however, there are reasons to avoid listing your space just yet. For one, you must first check with your landlord, condo-owner’s association or homeowner’s association to ensure the bylaws permit you to sublet or rent out your space. Next, consider how renting your space to strangers could affect your neighbors and the relationship you have with them.
If you decide to move forward with your Airbnb listing, we recommend speaking with an agent here at Gutman Insurance first. We can help you assess potential gaps in your coverage and recommend business insurance, a landlord policy, a rental dwelling policy, or an endorsement to protect you against potential loss and liability.