Insurance for Airbnb Hosts
Never underestimate insurance. You will have to purchase additional insurance coverage if you are an Airbnb host, because ordinary homeowners’ and renters’ policies will not cover short-term rentals.
Airbnb and other short-term rentals are not covered because they are commercial activities. Homeowners’ and renters’ polices are designed to cover just your personal possessions. Insurance companies will not reimburse you for damage to your property or possessions caused by a guest.
In case of unexpected bills or damages, check out Payfully, a safe and secure way to get paid instantly for upcoming bookings.
Nor will the insurance in your mortgage cover Airbnb because it is designed to reimburse the lender only in case something happens to your home. If you are renting your home, your landlords’ insurance will not cover Airbnb or your possessions because it only covers the actual structure and not your property.
This means you will have to purchase additional insurance that specifically covers your short term rental activities. Many insurers will cover home business activities, but this requires different types of coverage.
Why You Need Host Insurance
There are two big reasons why you will need to purchase additional coverage for your short-term rental: liability and protection of your possessions.
Liability means that you are financially responsible for what happens in your place. If your guest trips and falls in the shower and hurts himself, he can sue you. You and not Airbnb will be sued because it is your rental. Liability insurance protects you by paying for legal representation and a settlement if necessary.
Beyond liability you will need to protect your property because standard homeowners and renters policies specifically exclude coverage for losses related to business activities. That means they will not reimburse you if your guests trash your place or steal your stuff.
Part 2: Types of Insurance for Airbnb hosts!
You should also read your mortgage or lease, because some of those documents require additional insurance for business activities. You might be required to present proof of insurance — in other words a policy at some point.
You will need to get an additional policy that provides both liability coverage and protection for your property. Fortunately such coverage is available but can be hard to find.
Where To Find Insurance For Short-Term Rentals
Short-term rental or host insurance is a small but growing field. A number of companies in the United Kingdom offer host insurance, but can be harder to find in the United States.
Some places you can look for host insurance in the United States include:
- Airbnb. Airbnb offers Host Protection insurance to all US hosts at no additional cost. If you list through Airbnb you are automatically covered for eligible claims up to $1 million. Airbnb claims that the policy can serve as your primary protection. More information is available here.
- Your insurance agent or insurer. If you have existing homeowners’ or renters coverage, talk to your agent or visit your insurance company’s website. Many insurers will add coverage for business activities to existing policies for a few extra dollars. Allstate and GEICO are now offering policies for Uber and Lyft drivers.
- An insurance agent or broker. Generally insurance agents sell policies from one specific company such as State Farm. Brokers offer policies from a wide variety of insurers and some of them can provide specialized coverage. One reason to talk to a local agent or broker is to find out if any additional coverage is mandated by law in your area.
- Online insurance brokers. There is a new generation of online insurance brokers, such as Bungalow Insurance, that sell policies from a variety of insurers. Bungalow specializes in the sale of renters’ insurance to Millennials. They currently do not offer host insurance now, but there is a good chance Bungalow Insurance will enter that sector. Another broker, Proper Insurance sells vacation rental insurance in all 50 states. Proper specifically mentions short-term rentals on its webpage. These brokers are worth checking out because they will write policies regular insurers will not touch. Online brokers can also offer lower rates especially for hosts who are listing multiple units.
Making sure that you have proper insurance coverage now can save you from a lot of pain and trouble in the future.
