If you have been planning a vacation with hotel stay I am sure you have seen properties offered on Airbnb. Have you wondered what Airbnb is? Well, Airbnb is an online hospitality service for people who rent out their homes to those looking for accommodations in their community. This seems like a good idea for extra cash when you are away from home also. But before you rush to list your property on the website read over your homeowners or renters policy. Many insurance companies exclude coverage for business purposes in your home. When this is the case, consider obtaining a business policy to protect you if a renter is injured while staying in your property. Not disclosing all information related to your insured property could impact coverage and threaten the continuation of homeowners insurance.
Homeowners Insurance Policy
Insurance carriers are very specific on what their home policies do and do not cover. If you are thinking of renting out your property consult with your insurance agent to discuss current coverage. Having this discussion could prevent receiving a cancellation notice for business operations on your home. When reviewing your policy, you could find the following statements regarding homeowners’ coverage:
- Policies may state no coverage for business use under a homeowner’s policy. Business is defined as a trade, profession or occupation engaged in either full time, part time or occasionally on activities for which an insured receives no more than $2,000 in total compensation for 12 months prior to beginning of policy period.
- Insured means you and residents of your household who are your relatives or other persons under the age of 21 in your care and your relative; and students under age 24 who was a resident of your household before moving out to attend school and is also your relative under your care; not an insured includes nonresidents and nonrelative vacationing tenants.
- The insured location is described as the residence premises or any part of the premises used by you as a residence; location is not insured if it is not being used by you as a residence.
Insurance Options for Airbnb Hosts
Commercial Property Insurance
Commercial property coverage pays for damaged, stolen, or destroyed property including:
- Coverage for the building, but can include permanent fixtures, machinery and equipment.
- Your buildings contents such as inventory, office equipment, or supplies taken by others and property belonging to others that were left in your care.
Commercial Umbrella Insurance
Umbrella insurance is a form of liability insurance that supplements your basic liability policies protecting from major claims and lawsuits. Coverage applies when a covered claim exceeds the limits of a liability policy.
- Bodily Injury Liability – covers cost of damages to another person’s body resulting from an auto accident and injuries sustained by a guest or neighbor.
- Property Damage Liability – covers the cost of damage to another person’s property associated with damage to vehicles and other property.
- Personal liability situations such as slander, libel, false arrest, malicious prosecution and mental anguish.
- Rental Property Ownership – coverage protects against liability you may face as a landlord.
Airbnb Host Protection Insurance
Airbnb offers homeowners insurance coverage with a limit of $1 million for guests injured while staying in vacation rental. Coverage for damages is up to $1 million but prior to contacting Airbnb for reimbursement homeowners must attempt to resolve property damage claim with guest. For damage coverage, incident must have occurred during booking period and homeowner must be in compliance with all requirements on their Airbnb contract.
- Primary liability coverage up to $1 million per occurrence in a third party claim of bodily injury or property damage.
- Coverage for landlords and homeowners associations if claim brought against them because of injuries suffered by a guest during their stay.
- May cover claims if a guest damages building property such as a landlord filing a claim against a host.
- Can serve as primary coverage for eligible claims filed as a result of a guest staying in a rented property.
- Coverage is in excess to other coverage held by homeowner and claims denied by homeowners insurance before Airbnb will pay.
- Pay out may be actual cash value of items rather than replacement cost with damages reported within 14 days.
- No coverage offered for items such as cash, securities, pets, personal liability and common areas.
As stated on the Airbnb website, no coverage when liability arises from
- intentional acts that include assault and battery, sexual abuse or molestation by host or other insured party,
- loss of earnings,
- personal and advertising injury,
- fungi or bacteria,
- Chinese drywall,
- communicable diseases,
- acts of terrorism,
- product liability,
- pollution and
- asbestos, lead or silica
Please contact any of our offices so we can help you answer any questions regarding your homeowners’ policy.