Airbnb and Your Homeowners Insurance
Renting out an extra room in your home might sound like a great way to make extra cash. It can also create new risks.
When we last covered this topic in 2014, Airbnb, the biggest peer-to-peer rental clearinghouse, did not offer insurance to its hosts. Instead, it provided a “host guarantee” that covered up to $1 million in damages to “eligible property.” The coverage didn’t qualify as insurance, and only applied “…in the rare event of guest damages which are not resolved directly with the guest…” More significantly, this coverage provided no liability protection.
Things have improved for Airbnb hosts since then. Now Airbnb automatically provides Host Protection Insurance to Airbnb hosts and landlords in more than 15 countries, including the U.S. Airbnb says this coverage “protects against liability claims up to $1 million USD that occur in a listing, or on an Airbnb property, during a stay.” So do Airbnb hosts now have the coverage they need?
Maybe not. This plan protects Airbnb as the “named insured”; it covers hosts and landlords as additional insureds.
Under an insurance policy, an additional insured has a different status and rights than the named insured. A named insured has more rights under the policy than an additional insured. The named insured will have primary coverage, so if both parties are sued, Airbnb’s rights will take precedence over the host’s. Secondly, the named insured has the right to change, cancel or non-renew the policy without approval of the additional insured.
If you plan to rent a room, guest house or other accommodations through Airbnb or any other clearinghouse, you probably should check your homeowners insurance to see what it covers. If you make renting a frequent activity, you probably want to buy your own coverage. Most homeowners policies exclude coverage for commercial pursuits; some insurers might consider making rentals, even if it’s just a spare bedroom in your home, a business.
If a guest suffers a serious injury or death at your home and you’re found liable or negligent, you might need more than the $1 million Airbnb provides to cover legal defense and settlement costs. Please call us for a coverage review.
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