Airbnb hosts, like other rental property owners, can face numerous risks when renting out their home or vacation rental. Airbnb itself offers some protection for its host community; however, this does not guarantee coverage for all perils and unexpected circumstances that can occur.

Most hosts are also unaware that their traditional homeowners policy will not cover them in the event of a claim. The below guide provides an overview of insurance products and options for Airbnb hosts to consider when renting out their property to guests. In this article, we cover:

What Is Airbnb AirCover?

Airbnb rolled out their new AirCover offering in late 2021. This coverage replaces the previous Airbnb coverage program called Host Guarantee. The two offerings are quite similar in that they protect hosts from guest damages, with AirCover offering new protections and an additional host liability program. The AirCover program is completely free for Airbnb hosts.

AirCover was created to protect hosts from paying out-of-pocket for guest damages, including fees for extensive cleaning. Previously, the Host Guarantee program covered property damage caused by guests, and not much else.

Now, with AirCover, hosts receive:

• $1 million in liability insurance
 
• $1 million in damage protection
 
• Pet damage protection
 
• Deep cleaning protection
 
• Income loss protection

These protections come in handy in the event that a guest is injured, a guest damages your property, a guest’s pet damages your property, and/or you lose income if you cancel confirmed bookings due to damage.

For Airbnb Superhosts, claims are fast-tracked so any reimbursement can be distributed in a timely manner. And unlike previous Airbnb insurance offerings, AirCover allows a 14-day filing window for claims.

This sounds great, right? And for many hosts, it does reduce out-of-pocket expenses for cleaning and damages. But, when it comes to thoroughly protecting one’s property, AirCover is not a suitable replacement for insurance.

Is AirCover Insurance?

So is AirCover insurance? The short answer is no, AirCover is not an alternative to insurance. AirCover was created to compete with paid insurance offerings from competitors such as VRBO and Vacasa. AirCover is free for Airbnb hosts as an incentive to use the platform, but it is not recommended to replace a traditional insurance policy.

‍Airbnb states: “While AirCover protects you while you’re hosting an Airbnb stay or Experience, it is not a substitute for personal insurance. Since everyone’s situation is different, you should talk to your insurer to see how, or if, your policy overlaps with AirCover.”

The key language here is that AirCover only covers the property while a guest is there. If your home is sitting vacant, AirCover will not reimburse you for any damage caused by natural disasters, vandalism, or other factors. It is highly recommended to have a personal or business line of insurance to cover normal wear and tear and any extraordinary events.

Another difference between AirCover and another insurance line? Filing a claim. If your property is damaged by an Airbnb guest, Airbnb rules state that you must try reconciling the costs with the guest first, before filing any claim with Airbnb. For busy hosts, this can be time-consuming and frustrating. It also is not a sure guarantee that you will receive full compensation for the damages, unlike insurance where you can file a claim and receive a reimbursement without additional steps.

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Keith Sant, owner of Kind House Buyers, explains "Conventional homeowners insurance doesn't provide coverage for rental properties. On the other hand, Airbnb homeowners insurance offers coverage for things such as bodily injury to a guest or property damage caused by guests.

But, it's still essential to have additional rental property insurance. That's because it'll protect you against any harm to your amenities (swimming pool, hot tub, etc.) and provide for you if a guest sues for damages. Given below are a few things that aren't covered by Airbnb host insurance:

• Harm due to theft
• Damages caused by pets
• Accidental injuries

Related Reading: How to start an Airbnb Business

Homeowners Insurance and Airbnb

Many Airbnb hosts rent out a second home previously covered on a homeowners insurance policy. Homeowners insurance covers properties from named perils such as fire, lightning, and hail—all of which are events not covered under Airbnb’s AirCover.

The catch for Airbnb owners, however, is that homeowners insurance policies specifically exclude “business activity.” And because most Airbnb hosts do not live in their rental properties, the business activity exclusion applies. If your insurance company catches wind that your home is not actually vacated by you (or whomever is the policyholder), and the property is damaged by a renter instead, they will almost always reject your claim.

There is one exception in which your homeowners insurance may cover your Airbnb, and that is if you are also living on the property. If you have a multi-family property and are living on premises, your homeowners insurance carrier may offer a “unit or residence rented to others” endorsement. This endorsement will cause your premium to increase, but will likely be cheaper than purchasing a new line of insurance altogether.

Landlord Insurance and Airbnb

Can you use landlord insurance for an Airbnb? Possibly! Landlord insurance offers both property and casualty insurance, protecting you, your tenant, and any members of your business (e.g. a property manager). Landlord insurance covers your property from the main perils listed in a homeowners policy, along with extending liability to anyone living on your property.

The main difference between landlord insurance and homeowners insurance is that landlord insurance offers rental income protection. This means if your home is unfit for renters due to a reason such as fire damage, your landlord insurance policy should cover your rental income. And whereas homeowners insurance covers personal property – think furnishings, clothing, artwork – landlord insurance does not.

For Airbnb rentals, we recommend speaking with your insurance provider. Many landlord insurance policies will not cover short-term rentals of under thirty days. If you have a renter in mind who will stay more than a month consecutively on your property, landlord insurance could be right for you. You may want to consider home share insurance if you are renting out one of your rooms, while still living in the house.

What does landlord insurance cover?

Commercial Property Insurance and Airbnb

If you are planning on using your property as a true Airbnb, with short-term guests, you’ll want to investigate either a commercial, home share, or vacation rental policy. A commercial property policy (also called a business property policy) is one of the more common options.  

A commercial property insurance policy may be your best option if you do not live on your property and you are planning on using the property solely for short term rentals. Commercial property insurance covers both liability and property – so damage to your property or to your guests should be covered.

Umbrella Policies and Airbnb

If you are researching landlord policies for your Airbnb, you’ve likely stumbled across the term umbrella policy. An umbrella policy is an extension of the liability coverage offered in a basic homeowners or landlord insurance policy. Umbrella policies will reimburse you (or the policyholder) for damages incurred above the coverage outlined in your underlying policy.

For example, if a guest is staying at your property, gets injured due to a property fault (unsafe stairs, faulty electrical, etc.) and decides to sue, first your homeowners or landlord insurance will pay the initial claim. For any remaining need, an umbrella policy will cover the remainder or up to the policy limit.

A blanket umbrella policy provides coverage for rental properties in multiple cities or states, making it a good option for landlords/investors with multiple Airbnbs.  Note that if you operate your Airbnbs under a commercial property license, you will need a business or commercial umbrella policy.

Renters Insurance and Airbnb

You may be wondering how renters insurance factors into you and your property. As a property owner, you are not responsible for your renters’ belongings. A good landlord or commercial property policy will cover some of your belongings in event of damage – such as an appliance – but are not going to cover anything your renter brings into the house.

If you are renting an apartment or house and want to turn it into an Airbnb, your renter’s insurance will likely not cover your future renter. You should double check your lease to see rules on subletting and Airbnb’s. Some leases may forbid business activity on the property, in which case you cannot Airbnb your unit.

We recommend speaking with your rental insurance carrier to understand the exact terms of your coverage and any limitations about guests you can have living on premises.

‍Related reading: What’s the Difference Between Renters Insurance and Landlord Insurance?

Other Considerations for Your Airbnb

Whether you choose to add-on to your homeowners policy, get coverage through landlord insurance, or establish your property as a business to use a commercial property policy, there are a few more considerations.

All of these policies cover a range of liability and property damage. However, if you live in an area prone to certain natural disasters, you’ll need additional endorsements.

For example, if your property is in California, you’ll want an additional earthquake insurance endorsement. If you live in a flood zone, you’ll want flood insurance.

Also, neither AirCover nor standard insurance policies cover mold removal and damage caused by mold, so if your property is susceptible to water damage, consider a mold coverage endorsement as well.

Most insurance carriers offer these endorsements as an add-on to policies. Because Airbnb and most standard insurance policies do not cover these natural disasters, it’s important to do your research on what you may need.

Choosing Your Airbnb Insurance Policy

As the owner of a rental property, you can never be too careful when it comes to who stays in your home. Even the best of guests can cause damages that you will need to repair. While AirCover offers suitable coverage for interior damages and some liability protection, it’s not enough to rely on all-year round. When your house sits vacant in between guests, you’ll want an insurance policy to protect your property.

At Steadily, we offer landlord insurance for all types of homes and properties. Whether your Airbnb is an apartment in Chicago or a beach house in Florida, we’ve got you covered.
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