Airbnb is one of the most popular sites that organizes home-sharing, a process by which individual homeowners or even renters can advertise rooms for rent to short-term, paying guests, like a tiny hotel. The website currently displays around 800,000 listings from people all over the world who rent out their homes and property. According to a recent Barclay's report, up to 17% of rooms available in major US cities such as New York are listed through Airbnb.
If you are considering renting out portions of your home or properties that you own to short-term renters, or if you are already participating in this new, “share economy” system, you may have some concerns about insurance and liability on your property. Premises liability is complicated enough when it concerns everyday guests who you have invited onto your property. It gets even trickier when it involves people who are paying to use your home and all the facilities associated with it on a night-by-night basis.
Insurance Provided to Hosts by Airbnb
Airbnb did not originally offer any coverage for hosts to protect them from lawsuits brought by guests. Now, they offer something called Host Protection Coverage. This program offers primary liability coverage for up to $1 million for personal property damage or injury that a guest in your home may suffer. This would protect you, as a host, from lawsuits that a guest might bring against you for injuries or property damage they sustain while on your property.
The policy also covers injury that the guest causes to other people, for example, if a guest injures an apartment complex resident on the property and that person decided to sue the host for their guest's actions. In some cases, the coverage also protects landlords and rental property owners from lawsuits brought by guests who sustain injuries in the building in community spaces such as gyms or pools. On the flip side, the coverage also extends to lawsuits brought by landlords against hosts for property damage which the guest might cause to community spaces. So, if a guest broke a piece of gym equipment in an apartment complex by using it improperly, and the landlord wanted to sue the host for the cost of replacing that equipment, Airbnb would most likely protect the host from this lawsuit.
Airbnb Insurance Policy Does Not Cover
Although not required, Airbnb strongly suggests purchasing homeowners or renters insurance in addition to their free service. This is because there are a variety of things which are not covered by Airbnb's policy. As Airbnb clearly states on their website, the primary policy, as outlined above, called the Host Protection Coverage will not protect against claims from guests involving:
- Intentional Acts including assault and battery or sexual abuse or molestation by the host or any other insured party
- Loss of Earnings
- Personal and Advertising Injury
- Fungi or Bacteria
- Chinese Drywall
- Communicable Diseases
- Acts of Terrorism
- Product Liability
- Asbestos, Lead or Silica.
The policy also has a “shared limit” of $10 million. This means that hosts are sharing a policy with the thousands of other hosts. The total amount paid by Airbnb in one year will not exceed $10 million, so if other hosts claim the money early in the year, there may not be coverage left for later injuries.
Another loophole is that the coverage is limited to the time outlined by the actual booking, meaning that any damages or injuries sustained by the guest if they arrive early or leave late are not covered by the policy.
Homeowner's and Renter's Insurance
Airbnb also offers the “Host Guarantee,” which will reimburse hosts up to $1 million for damages to a host's property; however, there are some extreme limitations and Airbnb clearly states that the program should “not be considered a replacement or stand-in for homeowners or renters insurance.” The Host Guarantee does not cover cash and securities, pets, personal liability, shared or common areas and has limited protection for things like jewelry, collectibles, and artwork.
In order to be reimbursed for such damages, you will first need to go through your private homeowner's or renter's insurance policy. If you are denied, then you may submit your claim to Airbnb. Most homeowner's insurance policies have provisions which allow a homeowner to rent their property out for extremely limited time periods, such as once per year, or up to a couple of weeks a year. Some, however, have no such provisions, and almost all have limits. This means that, if you are planning on listing your home for rental on Airbnb and fail to update your insurance policy, you may have violated the conditions of your insurance and voided their responsibility to compensate you for your losses.
Renter's insurance, on the other hand, usually only covers the renter's belongings, not the property or the building. The building is covered by the landlord's insurance policy. This is why some landlords will not permit their tenants to rent their homes to short-term paying guests; their insurance policies may not cover damage done by these guests.
How to Protect Yourself While Using Airbnb
The best way to protect yourself from financial loss if you are renting a home on Airbnb or using Airbnb to find a play to stay on vacation is by consulting your insurance company and asking them how to ensure full protection for yourself before an accident occurs. There are many factors at play, and you should be as clear and upfront as possible from the beginning so that you can avoid unexpected massive liability or so that you have a strong case if someone injures you or damages your property. If you have suffered property damage or an injury on an Airbnb property or due to the dangerous actions of a guest, contact a personal injury attorney today. Call The Law Offices of Jeremy Rosenthal today at (303) 825-2223 for a free case evaluation.