Estimated Read: 10 minutes
Unlike some platforms, Airbnb does offer some level of protection for hosts if something happens at their property. Solely relying on Airbnb if something goes wrong however could put you at risk. We discuss what they offer, what they might not cover and how you can protect yourself.
How does Airbnb protect hosts?
Airbnb offers two types of protection free of charge to all of its hosts. One of these is the Airbnb Host Guarantee and the other is its Host Protection Insurance Programme. In essence, the Airbnb Host Guarantee covers damage to the hosts’s property. By contrast, the Host Protection Insurance Programme covers liability claims where the guest or another third party (e.g. a neighbour) brings a claim against the host, such as where the host is sued for something that went wrong.
What kind of things does the Guarantee Cover?
The Host Guarantee is designed to cover claims where the damage caused by your guest exceeds your security deposit or in cases where there is no security deposit listed. The level of potential cover offered is up to $1 million (or the UK equivalent) of property damage. Examples of where you might claim could be where a guest accidentally damages something or vandalises your property. Airbnb also clearly lists several things on its website that it does not cover, including:
- Wear and tear. This is also likely to be excluded by insurance companies but it is important to note that that if you have several guests stay at your property over the course of the year then the chance of damage caused by wear and tear may increase. It is important to keep your property maintained.
- Damage caused by a pet. If a guest brings their dog and the property is damaged, you may not be covered.
- Cash, securities and certain certain types of valuable items. It should go without saying that that if you leave cash lying around, you will increase the chances of it being stolen by your guest. Ideally, you may want to keep any cash or securities outside of the property or locked away if that is not possible. The same applies to things such as expensive jewellery, antiques and artwork. For a full list of what is excluded, check out their website.
- Personal injury claims. This is covered by Airbnb’s Host Insurance Protection Programme.
- Shared or communal areas. You may not be covered if the guest damages a shared or communal area that is not part of the listing.
The above is easily found on Airbnb’s website. However, when you look further into its terms and conditions, there are a whole raft of potential exclusions woven that may limit what you can claim for.
❌ The Guarantee is not an insurance contract. This is stated explicitly in its terms and conditions. This means that unlike an insurance contract, Airbnb are not obligated to payout for any claims under the Guarantee and you cannot complain to an insurance regulator such as the Financial Ombudsman if something goes wrong. If you need to make a large claim and you are not covered by your home insurer (more on this below), you may need to pay for any damages out of your own pocket if Airbnb refuses to cover any damages.
❌ The process for claiming is not straightforward. Before you make a claim, you will be required to resolve the dispute with the guest first. This may not be appropriate for every case, such as if the guest has vandalised your property or where criminal activity has occurred. If you cannot resolve the issue with the guest, you will need to submit your request ‘either 14 days from the guest’s checkout or before the next guest checks in, whichever is earlier.’ Airbnb also state that you must complete and file all of the relevant paperwork within 30 days, which is a fairly short window to claim. Contrast this with making an insurance claim. With an insurance company, you may have to submit evidence but you will be unlikely to have such a short deadline and will not be required to resolve the dispute with the guest directly.
❌ Its terms and conditions are not clear. There appear to be several potential exclusions and the wording is not always clear.
A good example of unclear wording is the stated $1 million worth of property damage cover. If you look at the wording, it is not clear whether the $1 million property damage cover is $1 million per property or $1 million for every property listed on Airbnb (there are currently thousands of properties listed on Airbnb worldwide). Why does this matter? Think of the claims limit as a pot. If the $1 million is a pot that is shared between everyone, there may be less cover for your property if lots of people have already claimed. This may not matter if you need to make a minor claim that does not cost a lot of money but may matter a lot more if your guest burns your house down.
Another potential minefield is a clause stating that Airbnb will be ‘entitled to exoneration’ if the property covered or the ‘risk associated with that property’ changes materially. How something is deemed as a ‘material change’ is unclear and you may not be covered if you renovate or extend your property.
❌ By hosting on Airbnb, you waive the right to take a class action lawsuit against them. A class action lawsuit is when a group of people take collective legal action against someone. By using Airbnb however, you are not able to do this. If a number of hosts were unhappy with Airbnb, they would have no way of taking this kind of legal action against them.
What kind of things does Airbnb Host Protection Insurance cover?
The Airbnb Host Insurance Protection Programme covers hosts for up to $1 million for liability claims brought against the host. Potential scenarios where you may need this type of cover could be where a guest is injured, holds you responsible and decides to take legal action against you. Or maybe your guest accidentally damages your neighbour’s property and the neighbour takes action against you. Without liability cover, you may have to pay for any legal costs and subsequent damages yourself. Unlike the Guarantee, Airbnb’s Host Protection insurance is an insurance contract and it is great that Airbnb offers this cover free of charge to all of its hosts. However, like the Guarantee, there are some limitations as to what you will be covered for.
On its website, Airbnb lists several things that are not covered:
- Loss of earnings. If you lose income as a result of your property being damaged due to a guest related claim, you will not be able to use this cover to claim any potential future earnings you may have lost as a result of a claim.
- Not all liability types are covered. On its website, it gives examples of property damage due to mould or pollution.
- Only accidents are covered. If an action caused was malicious (i.e. intentional) then you would not be covered.
When you have a closer look at what Airbnb cover, there are several exclusions and limitations to be found in its cover. Here are some important points you may want to consider:
❌ $1 million cover may not be enough. You will get up to $1 million cover per listing if you are an Airbnb host. This may seem like a lot. However, if a guest has a serious, life changing injury then the potential damages may exceed this. Imagine that your guest is young and has a lucrative career. If they earn a decent wage, have 30 or 40 plus years of work ahead of them and require lifetime care, it is quite easy to see how the cost of a claim could exceed $1 million. If you were unlucky enough to have a large claim made against you by your guest or a third party, you may have to pay thousands of pounds out of your own pocket if Airbnb is not prepared to cover any damages above $1 million.
❌ Physical assault. Hosts are not covered if they are physically assaulted by the guest. If you visited the property and you were assaulted, you may want to seek damages for this and may need cover elsewhere. If this happened to you, you may also lose earnings as a result of this. Airbnb guests are not subjected to stringent background checks and so whilst such a scenario may be remote, it is a possibility if you have to be at your property for any reason. It is best to take precautions to stay safe but you may also want to have adequate insurance in place too.
❌ Workers compensation and employers liability. If you managed an Airbnb property and one of your employees (e.g. a cleaner) became injured due to something you were responsible for as an employer, cover is excluded for any liability arising out of this, regardless of your duty under the law. If your employee decided to sue you because of something you were responsible for, you may need liability insurance elsewhere to be covered against this.
❌ Wrongful eviction. If you enter into a dispute with a troublesome host and get them evicted, you may not be covered for liability disputes such as this if the eviction is deemed to be ‘wrongful.’
Airbnb should be commended for giving Host Protection Insurance to its hosts but the above are just some of the things that are excluded by its cover. To find out more, you may want to download its ‘comprehensive program summary’ file on its Host Protection Insurance page. In terms of cover, Airbnb is unlikely to offer as much as a specialist insurance policy.
What about Experience Protection Insurance?
If you are interested in hosting an Airbnb Experience, Airbnb can also offer Experience Protection Insurance free to hosts that provide approved experience days. $1 million worth of cover per event is available and the cover offered is similar to Airbnb’s Host Protection Insurance with some tweaks due to the nature of what it is covering. The above exclusions and limitations listed in our section about Host Protection Insurance still apply. It is also worth noting that not all hosts are eligible for this cover. Check out their website for more details about this and what their cover offers. If you are looking to purchase additional insurance elsewhere for an Airbnb Experience, bear in mind that not all Airbnb insurance policies cover every type of event you host. For example, an Airbnb insurance policy designed to cover short lets at your property is unlikely to cover a tour around a city.
Won’t my home insurer cover me?
You may be thinking that your home insurer will cover you for Airbnb related claims. However, based on our research, most home insurers do not cover Airbnb or similar platforms. Most landlord insurance policies do not provide adequate cover either. If your property is covered by a holiday home or second home insurance policy, you may want to check that you are covered for claims caused by paying guests staying at your property.
How specialist insurance can help.
Many standard insurance policies are not designed to provide adequate cover for paying guests, which is why you could be at risk if you listed your property on Airbnb. A dedicated insurance policy on the other hand can fill this gap in cover.
Pikl provide specialist insurance for short-term letting, including cover for properties that are let out on websites such as Airbnb. If you already have insurance elsewhere, we offer a ‘Top-Up’ insurance policy. Your insurer can still continue to cover you whilst our cover can insure your home for any claims caused by your guests. You will need to let your insurer know that you are intending to do this but alternatively, we can also cover your home or landlord insurance as well as cover for your guests. Our insurance for when you have short-term guests can cover you for:
- Public liability cover for guest accidents involving bodily injury.
- Legal cover to defend or pursue legal claims against guests (including legal cover to help you evict overstaying guests).
- Accidental, malicious damage and theft cover if caused by a guest.
- Alternative accommodation for you or your guest if your property is being fixed as the result of a guest related claim.
- Fire and escape of water damage caused by a guest.
- Loss of keys and replacement locks cover if renting out your entire property.
In the first instance, you may want to check with your insurer first to ask if there is anything specific that you are not covered for. If you are not happy with the level of cover provided, getting insurance with us is simple and fairly straightforward.