The Art of Insuring Your Airbnb Property

Date Modified: Dec 12, 2023
Edited by Riley Morgan
Fact checked by Avery Montgomery
Listen minutes

As you prepare to become an Airbnb host, numerous factors must be considered, including the need for appropriate property insurance. The alluring promise of added income can be quickly overshadowed without a solid understanding of the insurance landscape of Airbnb hosts.

Standard renters’ and homeowners' insurance have their role, but how do they interact with Airbnb's host protection? This blog will guide you through the maze of insurance for Airbnb hosts and clarify policy types, coverage nuances, and the specifics of Airbnb's own protection programs. Let's turn the key and get right into it! 

The Importance of Insurance for Airbnb Hosts

Insurance for Airbnb hosts isn't merely about ticking off a requirement. It's about fortifying your hosting journey against the unforeseen. Consider the risks: a guest slipping and falling in the bathroom, a broken vintage vase, or severe damage from unpredictable weather conditions.

Airbnb guest

Beyond guest-related mishaps, the right insurance can financially protect you from other perils, such as theft, vandalism, or natural calamities like floods and fires. Being prepared means being protected, and understanding the breadth of potential incidents underscores the true importance of insurance for Airbnb hosts.

Airbnb Renter Insurance

If you're a tenant yourself and want to become an Airbnb host, your first port of call is to determine whether you can sublet.

Begin by reviewing your rental contract to see whether it covers subletting. To cover your bases, also speak to your landlord or management company to see if you are allowed to host other people.

Ignoring this step could potentially lead to eviction or legal action taken against you, which is not the foot you want to start your hosting journey on.

Once you’ve confirmed that you’re allowed to host, the next question is: “Do I need additional insurance?” The answer is probably yes. Your standard renters’ insurance, while offering a degree of protection for your personal property and liability, might fall short when you introduce Airbnb to the question.

Here's why: Standard renters’ insurance policies are typically designed to cover personal but not commercial use. Hosting on Airbnb often falls under the umbrella of commercial activity, as you are now operating a small business from your rented space. Such commercial activities typically warrant a higher liability limit to cover a different set of risks related to guests.

Therefore, you might consider opting for specialized business insurance for more comprehensive coverage. Many insurance companies offer home-sharing endorsements or riders that can be added to your existing renters’ insurance policy to cover short-term rentals. 

Here is a short summary of your options:

Type of Coverage

Description

Companies 

Home-sharing endorsement

Adds onto existing homeowners’ or renters’ insurance to cover short-term rental activities

  • Allstate
  • State Farm
  • Liberty Mutual

Specialized business insurance

Insurance specifically designed for regular rentals acknowledging the commercial nature of hosting

  • Proper Insurance
  • CBIZ

Pay-per-use insurance

Provides coverage only when the property is rented out, allowing you to pay only for the days you host

  • State Farm
  • Nationwide
  • Liberty Mutual

 

However, if you’re planning to host for a longer period, you might consider a more specialized and robust policy designed explicitly for long-term business operations, such as commercial property insurance and business liability insurance.

Airbnb Homeowners’ Insurance

A typical homeowners’ insurance policy typically covers personal property damage, liability, and even some sporadic, non-commercial renting. But, similar to renters’ insurance, Airbnb hosting, as a business activity, might not be within the purview of your standard coverage.

In most cases, you will need additional coverage. What if a guest accidentally causes fire in your home or a break-in occurs during their stay?

Similar to renters’ insurance, some providers offer home-sharing endorsements, which supplement your standard homeowners’ policy. However, you can also opt for more comprehensive coverage, such as commercial property insurance or business liability insurance. Furthermore, you can also take advantage of Airbnb’s built-in protection programs, which we will discuss in more detail below. 

Best Insurance for Airbnb Hosts

When you’re considering a long-term commitment to Airbnb hosting, you will need specialized insurance tailored to the unique risks of frequent guest stays. The two common types of insurance you will need are commercial property coverage and business liability coverage.

Commercial Property Coverage

This policy protects hosts who rent out their property regularly, be it on Airbnb or other platforms. It covers the entire home or condo, along with your personal property, against theft, vandalism, and certain natural disasters.

Commercial property coverage recognizes the commercial aspect of Airbnb hosting and provides more comprehensive coverage and higher limits than standard homeowners’ insurance. However, it may not cover all natural disasters (like floods) and can be more expensive than standard homeowners’ policies.

Business Liability Coverage

Liability coverage protects Airbnb hosts against claims arising from injuries to guests or if a guest causes harm to someone else while staying at your property. It covers legal fees and medical expenses, as well as provides peace of mind for hosts.

Business liability is typically more robust than the liability coverage offered in a standard homeowners’ policy. However, it might not cover intentional acts of guests, such as deliberately causing damage, and excludes certain high-risk activities, such as trampolines and pools without fences.

Here’s a short summary of companies that offer these types of coverage:

Insurance Company

Average Annual Premium*

Coverage Highlights

CBIZ

$1,600

  • Replacement costs for buildings and contents
  • Damage caused by guests
  • Loss of rental income following a property loss
  • Extensive liability for pools, docks, lakes, hot tubs, bicycles, etc.

Proper Insurance

$1,500 – $3,500

  • Coverage for building and contents
  • Damage from sudden collapses of the ground surface due to erosion
  • Loss of rental income with no time limit
  • Optional flood insurance

Obie

$1,000 – $4,000

  • Dwellings of all sizes, including single-family rentals, multi-family homes, duplexes, condos, etc.
  • Customized coverage to meet the specific needs of the policyholder
  • Optional coverage for lost rental income, personal property, and liability
  • Optional coverage for other structures like garages and pools

Farmers

$1,000 – $3,000

  • Comprehensive coverage for commercial property and liability
  • Optional coverage for lost rental income, personal property, and liability
  • Optional coverage for other structures like garages and pools

Safely

$1,000 – $4,000

  • Coverage for various properties, including condos, cabins, cottages, duplexes, and townhouses
  • Coverage for on-site incidents, including property contents, structural property damage, and personal injury
  • Pay-per-use option, where you can pay for coverage only when you have guests

*The average annual premiums depend on multiple factors, including the location, size, and age of your rental property, as well as the coverage limits you choose.

Bonus: Does Airbnb Provide Insurance for Hosts?

Here’s a kicker: When you rent your property through Airbnb, you automatically receive protection against some events at no extra cost. In an initiative to ensure a safe and secure hosting environment, Airbnb offers two primary protection programs: Airbnb Host Protection Insurance and Host Guarantee. They are designed to provide a safety net and can be obtained at the same time.

Airbnb rental cabin

While they provide substantial protection, they may not be as comprehensive as insurance for Airbnb hosts offered by some of the best homeowners’ insurance companies. Now, let’s get into the details of these programs to understand how they can fortify your hosting experience.

Airbnb Host Protection Insurance

Aribnb's Host Liability Protection is a free program offered to every property owner that provides liability coverage for up to $1 million per occurrence. While it's not exactly a form of insurance, it covers:

  • Bodily injuries to guests (e.g., if a guest trips over a rug and breaks a wrist on your property)
  • Damage or theft of guest property
  • Damage caused by a guest in common areas (e.g., lobby) or neighboring properties

On the other hand, it doesn't cover the following:

  • Intentional damage caused by a guest
  • Damage to your personal property

Host Protection also doesn't protect against mold or fungi and illegal criminal activity. It also doesn't protect against damage to your belongings. This is where Airbnb Host Guarantee or Host Damage Protection steps in.

Airbnb Host Guarantee

Airbnb’s Host Damage Protection is another program offered by Airbnb for free that provides property coverage for up to $1 million.

The policy covers: 

  • Damage caused by a guest (e.g., broken plates)
  • Unexpected cleaning costs due to a guest’s behavior
  • Income lost if you are forced to cancel a booking due to damage caused by a guest

However, it doesn’t cover:

  • Damage from ordinary wear and tear
  • Damage to cash and securities, collectibles, rare artwork, jewelry, and pets
  • Loss due to acts of nature (e.g., hail or flood)
  • Injury or property damage to a guest

In case of an incident, you have 30 days in total to complete the entire claim process under the Host Protection Insurance. First, you need to contact the guest within 14 days after their checkout and notify Aribnb if the guest refuses to pay for the damage. Airbnb will then work with its insurance partner to handle the claim, which might involve investigating the incident and, if necessary, compensating for the covered damages.

Bottom Line

Embarking on your Aribnb hosting journey can be an exciting and potentially profitable venture. But before you begin, take time to make the right decision about insurance for Airbnb hosts.

Review your current insurance and seek out additional coverage if necessary. You can also leverage Airbnb's no-extra-cost protection programs if an incident happens on your property. Being appropriately insured provides a safe and secure environment for both you and your guests – a key ingredient in successful hosting.

Sources

Insurance Consultant
Frederik Stapleton, an Insurance Consultant with over five years of experience, joined TrySmartly in 2022. Renowned for his deep understanding of insurance products and risk management, he crafts insightful articles to guide readers in making informed decisions.

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