What Homeowners Need to Know about Airbnb and Insurance

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How to make money on the side without putting yourself at risk

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Renting out extra space on Airbnb is a fantastic option for homeowners looking to earn passive income. But before you take glamour shots of your place and start creating your listing, you need to make sure you protect your home, yourself, and your guests.

As an Airbnb host myself, this is a topic that I’ve researched extensively in order minimize risks and have peace of mind. I’ve been using Airbnb in Denver for more than a year, and I have yet to have a negative experience or incur damage to my property. Unfortunately, that doesn’t mean something unexpected won’t happen in the future.

Creating a safe environment, purchasing the right coverage, and understanding your policy will provide peace of mind for both you and your guests.

The Basics

Safety

The best and easiest way to minimize your liability as a host is to ensure that guests are safe at all times. Before you even think about hosting through Airbnb, take a detailed look at your entire property — rooms, entrances, yards, etc. — and make sure there are no clear risks.

Do you have an uneven walkway that could cause a fall? Are there swings, trampolines, or other “features” that could end up seriously harming a guest? These should all be fixed before you allow anyone access to your home. You can’t depend on guests to use “common sense” when they’re on your property.

Emergencies

All your bedrooms should have fire and carbon monoxide alarms, and you should have at least one fire extinguisher in your house.

Email safety instructions to guests before their visit (Airbnb makes this very easy) and print out a hard copy to display in guest areas at all times. Upon check in, answer any questions that guests have, and make sure they know how to locate and use your fire extinguisher.

Maintenance

Always keep up and maintain your property during inclement weather. Ensure walkways are clear at all times and that branches or trees aren’t in danger of falling after severe storms. I live in Denver, so I have to shovel walkways and throw down salt after snowstorms to ensure guests don’t slip and injure themselves.

Pets

If you have a furry friend, make sure they’re used to strangers being in your home. If you have any doubt that your dog, cat, parrot, ferret, or whatever won’t attack a guest, you probably shouldn’t host. Even if your dog is friendly, larger pets can easily knock down and injure young or elderly guests.

I have a small, well-behaved dog, but I don’t leave him home alone with guests since any animal can become unpredictable around new people.

Sadly, dog bites and injuries from pets aren’t an uncommon occurrence with Airbnb, so do everything you can to keep your guests (and your pets) safe.

Security

If you have jewelry or securities, ensure that these are locked and kept out of guests’ reach. When I host an Airbnb guest, I keep all my valuables locked in my bedroom during their stay.

Insurance and Liability

Airbnb

Now to the fun stuff. Currently, Airbnb provides a $1,000,000 host guarantee and a $1,000,00 host insurance policy. It may sound like these provide a ton of coverage, but both of these programs are subject to certain conditions, limitations, and exclusions.

The host guarantee is fairly straightforward. It protects your property and belongings from damages caused by guests. However, this guarantee does not protect pets, fine art, cash, or securities.

The host insurance policy is less clear. Airbnb claims that guests have up to $1,000,000 in liability coverage with this policy, but without reading the policy in full, you don’t really know what’s excluded or covered.

If you do even a little research online, you’ll see that many hosts have encountered problems when trying to take advantage of these two programs. The main issues appear to be:

  • Airbnb expects you to use their coverage after you’ve already gone through your own insurance.

  • Airbnb requires that you know exactly which guest cause damage or took your property. This can be difficult if you’re renting multiple rooms out in a single home or apartment.

  • Claims can take a long time. Some people report that Airbnb can take weeks or even months to resolve or reject a claim.

  • Even guests who have photo evidence, police reports, and other documentation have had their claims denied.

Here are just a few snippets from hosts’ Airbnb horror stories:

Basically, there is no Host Guarantee. Airbnb simply tries to convince the fraudulent guest to pay. If they don’t pay, you (I) are screwed. Airbnb is not going to pay a dime.

A guest stole a TV and damaged our property and we believed Airbnb’s Host Guarantee. After submitting the initial documentation, we waited TWO MONTHS before Airbnb finally responded.

I am a big Airbnb fan, both as a host in my New York apartment and as a guest. But when I had my first bad experience with a guest that damaged property (floor, walls) and stole a whole set of expensive cosmetics from a friend that were stored in my bathroom, Airbnb behaved terribly. They basically dragged out the process over a month, demanding more and more “evidence” (a police report, exact list of missing items, photos of damage, quotes from handyman and Amazon list price links were insufficient). After jumping through all the hoops, they told me they decided to close the case anyway.

Your Policy

All homeowners policies have exclusions for “business use.” This means that if you’re making money by renting your property through services such as Airbnb, VRBO, or HomeAway, you won’t be covered for damages, theft, or other unforeseen events that might occur.

Always be honest with your insurance company. It’s always better to know you’re covered rather than just thinking you’re covered, so we suggest purchasing an endorsement or commercial policy if you’re renting out your home or a portion of your home.

These are relatively easy to obtain, and many carriers now offer special coverages (if you ask for them) since services like Airbnb are so popular. Our team is well-equipped to help anyone renting out their home or a portion of their home understand their coverage gaps, buy the right policy, and get peace of mind.

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