It happens every day: property owners signing up for Airbnb looking to make some extra income throughout the year. After all, signing up for the home sharing service is an easy process. With just a few clicks, you can have your property up on the website and have your own miniature rental/hotel business in no time. But with this ease of use comes a shocking fact: few homeowners are prepared for the financial and legal consequences of lacking coverage from an Airbnb insurance provider.
Most domestic insurers consider a short-term rental on Airbnb, no different than a hotel, and classify the transaction as “business activity”. Some carriers will provide a limited home-sharing endorsement typically worth $10,000 in coverage, but beyond that, virtually any claim could be denied. See this insurance provider who denied an airbnb claim.
Why Property Owners Need a Short-Term Rental Insurer
If you’re renting out your home on Airbnb or another property rental site, it’s critical that you obtain adequate coverage before listing your home up for rent. With an increased number of states now regulating rentals, most property owners are now legally required to maintain business liability insurance if they rent out their home on a short-term basis. If you’re about to rent out your home or you’re currently doing so, find a vacation rental insurance company who can help ensure you stay compliant with current laws and keep you protected from property damage or liability issues.
Take 5 minutes and get a quote online with Proper Insurance today!
In the Event of a Total Loss
There are two ways that an insurer can reimburse you for a complete loss of your property. One is by using what is called an Actual Cash Value system. In this method, the cost of rebuilding your property is calculated. Then depreciation (think of this as loss of value over time) is subtracted from this cost. What this means for you as the insured is that if you are making a claim on an older property, you could be out of thousands of dollars. The other method of reimbursement is known as the Replacement Cost valuation method. In this method, the claim that is paid is equal to the amount required in today’s dollars to rebuild the property. Note there is no factoring of depreciation. As the insured, you are able to have your property completely rebuilt at no detriment to you. Proper Insurance chooses to cover our clients with the Replacement Cost method, meaning that our clients’ are issued the funds to rebuilt completely in the event of a loss.
While some property owners aren’t aware of the need for coverage, some simply don’t want to shoulder the Airbnb insurance cost for commercial liability and property damage protection.
An Airbnb Insurance Company Might Save You Money
With the potential of liability issues exceeding $100,000 in damages and the real risk of fire, theft, and other property damage, having commercial short-term rental insurance is extremely important for property owners who rent out their home on services like Airbnb. Proper Insurance offers one of the most affordable and comprehensive plans available on the market. It replaces your current homeowner’s coverage and acts as your primary coverage when guests are staying at your home. For more information on the price for Airbnb insurance coverage on your property, please try out our 5-minute online quote today.
Beware of Free Airbnb Insurance Providers
When listing your property on Airbnb, you may have noticed two free coverages offered by the short-term rental company: The Host Protection Insurance and the Host Guarantee. Both these plans were created to give property owners a peace of mind when renting out their property. However, there’s a few problems with relying only on these plans. For starters, there’s two main risks that hosts face: property damage and liability. Let’s start with the Host Protection Insurance, an actual insurance plan designed to protect you from liability. Liability is a term used to describe being legally responsible for something. What most hosts aren’t aware of is that they are actually legally responsible for all the guests staying in their home. In fact, in the eyes of the law, you’re not much different than an actual hotel business.
If a guest hurts themselves in your home or on your property, then they may choose to hold you liable for the medical bills and any other expenses related to their injury – even if you’re not directly responsible. These types of issues often turn into lawsuits that can drag on for years. The problem is that unlike a large hotel business, most hosts don’t have the financial means to reimburse a guest for an injury sustained in their home or pay to defend themselves from a lawsuit.
Airbnb’s Host Protection Insurance is designed to protect you from these liability claims but the problem is in the terms of the plan. Unfortunately, the terms and exclusions of this coverage plan make it difficult to receive reimbursement beyond minor issues. And if you search around for Airbnb insurance problems, you’ll find countless stories of property owners who weren’t able to get reimbursement for their claims. One concerning exclusion from their liability coverage is assault and violence. If someone breaks into your home and hurts your guest, then the guest could sue you. It might not be your fault, but you’ll still need to pay for the legal expenses to defend yourself. And what if they successfully sue you for a door that wasn’t secure enough? Airbnb wouldn’t cover this, so you’d have to foot expenses that could very well add up into the hundreds of thousands of dollars.
Airbnb Property Insurance
Airbnb’s second plan, the Host Guarantee, is a free form of property damage coverage offered to property owners. This plan does not cover liability and instead protects the home and some of the property within. However, this guarantee is not an insurance plan. It’s merely a guarantee by the rental platform. Like their liability coverage, the Host Guarantee is full of exclusions and holes that could leave you with a large bill. And because of the extensive number of requirements just to submit a claim, you may have trouble getting even a small amount of reimbursement.
Don’t Rely on Your Homeowners Insurance Either…
Another mistake property owners make is to rely on their homeowner’s insurance coverage instead of an actual Airbnb insurance provider. Homeowner plans are designed to cover you from property damage and liability based off a very specific set of circumstances that do not include rentals. This is because when you rent out your home, whether on a frequent or infrequent basis, the risk for property damage and liability problems go up significantly. Unfortunately, this is not factored into your current homeowner’s plan. If an insurer finds out you’re listing your property for rent, they’ll often terminate your coverage and refuse to reimburse you for any claims filed. Unfortunately, most homeowners don’t realize this until it’s too late.
Choose Proper Insurance for Your Property
Proper Insurance is a vacation rental insurance provider that offers comprehensive coverage for both liability and property damage. In addition, Proper Insurance replaces your current homeowner’s insurance coverage for an all-in-one plan you can count on.
Airbnb Specific Enhancements
When you rent your home on Airbnb, you take on risks that are not anticipated or covered by a standard homeowners policy. With Proper Insurance, you get a policy specifically designed for Airbnb with coverage enhancements such as theft, damage to your rental by a guest, and animal and pet liability. Every Proper policy comes with $1,000,000/2,000,000 in commercial general liability that extends to amenities your Airbnb offers such as a pool, hot tub, watercraft, bicycles, docks, and much more! Get piece of mind with Proper’s Airbnb insurance.