When Homeowners Insurance Denied an Airbnb Claim: The $120,000 Case Every Host Should Know
A Homeowners claim can be denied because of Airbnb activity even when a guest had nothing to do with the damage. That’s the practical lesson from a documented California case in which Travelers Insurance denied a $120,000 storm damage claim—not because a guest caused the loss, but because the property had been listed on Airbnb, triggering the policy’s business activity exclusion.
Even though the damage did not occur during the Airbnb rental, the fact that she violated the rental exclusion section of her insurance contract was enough for Travelers Insurance to deny reimbursement.
Key Takeaways:
- Hosts who rely on Airbnb AirCover face a separate gap—AirCover is not an insurance policy and does not respond to Homeowners claim denials.
- Homeowners insurance policies typically include a business activity exclusion that can be used to deny any claim at a short-term rental property, including damage with no connection to a guest.
- In the Richer v. Travelers Insurance case, a 120-foot tree fell on a California home during a non-rental period. The $120,000 claim was denied solely because the property was listed on Airbnb.
- Home-sharing endorsements added to Homeowners policies don’t property damage problems for investment properties or non-primary residences.
The Travelers Insurance Lawsuit: What Actually Happened
A lawsuit was filed after California homeowner Emily Richer was denied reimbursement by her Homeowners insurance company following an Airbnb listing on her property. According to the original complaint filed against Travelers Insurance, Richer filed a property damage claim with Travelers after a 120-foot tall tree fell onto her roof, causing up to $120,000 in structural damage. Travelers denied the claim after learning she had rented her home on Airbnb.
Why the Claim Was Denied Even Though No Guest Caused the Damage
The detail that makes this case instructive isn’t that a guest caused damage—it’s that no guest did. The tree fell on Richer’s roof outside of any rental period. Travelers didn’t deny the claim because of anything related to a guest stay. Travelers Insurance denied it because the existence of the Airbnb listing itself was enough to trigger the policy’s rental exclusion clause.
This is how most Homeowners policy exclusions work in practice. The business activity exclusion doesn’t require a guest to be present at the time of loss. It requires only that the property was being used as a short-term rental. Once the insurer treats the property as a business, the business activity exclusion can be used to deny claims at the property—fire, storm, theft, or otherwise. For a full explanation of how the business activity exclusion works and what it means for hosts, see why Homeowners insurance doesn’t cover short-term rentals.
If you’re currently using Homeowners insurance to cover a short-term rental, your coverage may have the same gap. Verify your insurance with a short-term rental specialist.
Why Homeowner’s Insurance Doesn’t Cover Airbnb Rental Properties
Unfortunately, standard Homeowners insurance plans do not cover short-term or Airbnb rental properties. This is because short-term renting out a property is considered a commercial activity that falls under the business exclusion section of your contract. Commercial activities like Airbnb or Vrbo property rentals have calculated risks or exposures that standard Homeowners insurance carriers don’t have factored into the coverage or premiums.
That means having reliable commercial vacation rental insurance intact before you list your property for rent is extremely important, whether you rent out your property a few nights or regularly throughout the year.
Why Home-Sharing Endorsements Don’t Fix the Problem
Many domestic carriers introduced limited home-sharing endorsements following the Richer lawsuit, but they carry significant limitations most hosts don’t discover until they file a claim. They apply only to primary residence properties—not investment or secondary homes. On top of that, they are limited in scope on both property and liability coverage, and they often provide less protection than hosts expect.
If your short-term rental is not the home where you primarily live, a home-sharing endorsement likely doesn’t cover your STR.
What Coverage an Airbnb Host Actually Needs
Hosts need a policy written specifically for Commercial rental activity—one that treats the property as a business, not a personal residence. Understanding how Homeowners, Landlord, and Commercial policies compare for short-term rentals is the clearest way to see why standard coverage falls short before a claim ever happens.
Proper Insurance is the nation’s leading short-term vacation rental insurance provider, with the most comprehensive policy on the market. We protect homes in all 50 states with short-term rental coverage for your property, your business income, and liability. The Proper policy is purpose-built to cover the exposures Homeowners insurance excludes: guest-caused damage up to your full policy limit, loss of business income during repairs from a covered loss, commercial liability for guest injuries on and off premises, and specialized coverages including amenity liability, bed bug and flea protection, pet and animal liability, and squatters coverage.
Frequently Asked Questions
Can a Homeowners insurance company deny a claim because of Airbnb activity?
Yes. Most standard Homeowners insurance policies exclude business activity. Once a property is listed as a short-term rental, the insurer may use that exclusion to deny any claim at the property—including damage that occurred when no guest was present. The Richer v. Travelers case is a documented example of exactly this outcome.
What insurance should Airbnb hosts have instead of Homeowners insurance?
Hosts need a policy written specifically for short-term rental properties — one that treats the home as a commercial property rather than a personal residence. This covers guest-caused damage, commercial liability, Business Income, and the other exposures a Homeowners policy excludes.
What is the business activity exclusion in Homeowners Insurance?
It’s a policy clause that removes coverage for losses at a property used for commercial activity. Short-term rental platforms like Airbnb classify the property as income-generating, which most insurers treat as a business use — triggering the exclusion. For a full breakdown, see why Homeowners Insurance doesn’t cover short-term rentals.
