A standard homeowners insurance policy will usually exclude coverage for short-term rentals, including bookings through digital apps like Airbnb. Except for rare instances, most insurance companies see vacation rental as a separate business venture requiring individual coverage. If monetizing your property violates your homeowners insurance contract, you must purchase additional benefits to guarantee protection against the many liability risks associated with renting.

Understanding Short-Term Rentals

While subleasing property to generate income is not a new concept, short-term rentals have risen sharply over the past decade due to companies like Airbnb, VRBO, and Vacasa. These services conveniently match renters to lodgings and grant hosts access to a guest’s rental history, allowing for upfront online payments and third-party oversight and protection.

However, despite the many advantages of app-based vacation rentals, most standard homeowners insurance policies withhold coverage from individuals actively hosting guests through Airbnb. To guarantee comprehensive protection for their home businesses, Airbnb hosts must purchase supplementary commercial coverage or a short-term rental insurance endorsement through their current insurer or any outside competitor.

How Homeowners Insurance Covers Airbnb

After buying a house, you must secure homeowners insurance for covered perils like fires, windstorms, and falling objects. These benefits are available to you when you live in your home full-time, and many insurance companies may extend coverage if you have a one-time or infrequent renter, so long as it’s requested in advance. However, consistent use of Airbnb and similar applications for frequent rentals of your home may violate your homeowners insurance policy, and you may need additional coverage.

Thoroughly review your homeowners policy before enrolling in an app-based vacation rental service. Ensure you fully understand when you would retain coverage for a short-term rental and when to purchase supplementary policy riders or standalone benefits.

The Limitations of Homeowners Insurance for Short-Term Rentals

Most standard homeowners insurance policies withhold reimbursement for damages incurred with your house operating as a business or liability claims related to a short-term tenant. Therefore, if you list your property on Airbnb without first securing additional coverage or applicable policy endorsements, you risk underpayment or flat-out claims rejections for otherwise covered perils.

Personal Liability Coverage

Most homeowners insurance plans include personal property and liability protection for guests and their belongings, which many Airbnb hosts assume will neatly transfer to their short-term tenants. However, insurers may deny coverage for vacation rental liability claims filed on policies without applicable endorsements or standalone landlord or commercial benefits.

For example, if your neighbor came by and slipped on your steps, your homeowners liability insurance would help absorb their medical bills and potential legal fees. However, if a paying guest experienced a similar accident, you would likely have to pay all associated expenses out-of-pocket. Also, if this same individual stole valuable items from or vandalized your home, you would only see reimbursement through a vacation rental policy endorsement, standalone landlord insurance, or business coverage.

Understanding Airbnb’s Vacation Rental Coverage

Considering the implicit threat of theft, robbery, or vandalism that comes from allowing strangers onto your property, all hosts have access to the following specially formulated Airbnb home insurance – or Air Cover – programs:

Airbnb’s Host Protection: This complimentary insurance program protects you against lawsuits and medical bills from guests who injure themselves or lose their belongings on your property. Air Cover liability benefits apply to all Airbnb listings and offer up to $1 million in reimbursement for a renter’s bodily injury or property damage claims.
Airbnb’s Host Guarantee: If a guest damages your home or belongings and refuses to pay, Airbnb’s host guarantee program will cover up to $3 million in losses. Coverage includes reimbursement for deep cleanings, stolen art and valuables, pet damages, vehicles stored on the property, and rental income lost during repairs.

However, keep in mind this built-in insurance for Airbnb properties does not cover wear and tear, mold, acts of nature, or a general loss of rental income.

Alternative Insurance Options for Airbnb Owners

In response to the rising popularity of short-term rentals, many insurers have begun offering unique vacation rental policies and endorsements specifically designed to protect Airbnb properties. Before listing your home online, follow these steps to purchase applicable benefits:

Contact your insurance company about potential vacation rental policy endorsements.
If no endorsements are available, inquire about standalone vacation rental coverage or secure quotes from competing insurers.
Narrow down your options and purchase a plan to work in conjunction with or as part of your existing homeowners insurance policy.

However, securing affordable vacation rental insurance can often prove difficult, as many of the biggest companies still have wavering opinions of Airbnb and VRBO. If so, explore the following alternatives:

Commercial property insurance: Protects your home business’s physical assets from covered perils.
Standalone landlord insurance: Covers the primarily rented structure, neighboring structures, lost rental income, personal property, and liability claims.
Umbrella insurance: Significantly expands liability limits on existing homeowners policies, protecting against devastating lawsuits and severe injury claims.

All in All

While renting rooms and properties through Airbnb can conveniently generate income, regularly doing so can nullify your existing homeowners insurance. Therefore, contact your insurance company before listing your home on Airbnb or a similar website to understand the full extent of your benefits and their limitations. Remember that monetizing your home without purchasing a vacation rental policy endorsement can result in dangerous coverage gaps, potentially leading to costly out-of-pocket payments for tenant injury claims and lawsuits.

Frequently Asked Questions

If your current insurer excludes coverage for Airbnb properties, research dwelling policies with vacation rental endorsements or a standalone commercial property plan. Or, if you frequently rent your home through Airbnb, purchase a more comprehensive landlord insurance policy with expanded benefits for all structures on the property, lost rental income, and liability claims.

Yes. All homeowners are legally responsible for keeping their properties free from potential hazards, allowing injured guests of any relation to sue them for damages. However, Airbnb automatically protects hosts with up to $1 million of personal liability coverage for incidents proven as mere happenstance or resulting from a renter’s negligence.

Yes, but under more stringent conditions. If you have injury hazards on your property, such as swimming pools or trampolines, Airbnb may require you to secure liability waivers from all guests before granting Air Cover protections. Likewise, these amenities must always comply with local safety laws. For example, depending on your location, Airbnb may only cover pools with a surrounding fence or other structures with city-approved permits.

Whether or not you actively live in your home, renting any part of it through Airbnb will likely disqualify you from standard homeowners insurance protections. Albeit for one-time short-term rentals pre-approved by your insurer, monetizing your property will usually necessitate a supplementary vacation rentals policy endorsement or standalone business insurance.

Does Homeowners Insurance Cover Airbnb?

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