A lot of hosts don't realise that the level of insurance that Airbnb offers is far from comprehensive and if you don't have your own insurance then you are putting yourself at a huge risk.
If that wasn't bad enough, your normal insurance provider may also not cover you simply because you rent on Airbnb. If you take away nothing else from this blog post, call your insurance company and make sure they know you rent on Airbnb and check that you are covered. You might be in for a nasty surprise.
So what does Airbnb offer?
Airbnb has two programs that hosts commonly confuse with insurance. There is the Host Guarantee program and the Host Protection program.
Obligatory note. This is not to be construed as financial advice or advice on your individual circumstances. Please always consult with a suitably qualified professional before making any decisions.
Airbnb Host Guarantee
So what is the Host Guarantee? It is effectively a marketing tool used by Airbnb to help users gain confidence in renting out their homes to complete strangers. Something that would normally make people think twice.
If you get past all of the marketing copy on the website and actually read the terms of use, it paints a fairly bleak picture.
The above screenshot comes directly from the Airbnb 'Host Guarantee terms of use. It explains that the policy is actually a marketing tactic and should not be construed as an insurance policy.
So where does that leave you as a host?
It's not all bad news. In most cases where you jump through the hoops, they will pay you something. It may not be as much as you need, but it will be something.
As a host, you run into problems if you don't submit the claim on time. As of writing you need to either submit the claim within 14 days of the check out, or before the next guest checks in. On the surface, that seems fair. The only problem is the sheer amount of information you need to provide in that timeframe.
If you have a back to back booking with say 4 hours between that leaves you very little time to get pictures and quotes or an invoice and submit it on time. And if you miss the deadline, you're completely out of luck.
So, the bottom line is that the Host Guarantee does work sometimes, you simply can't rely on it to keep yourself secure.
Host Protection
The Host Protection Program is the one that offers up to $1,000,000 USD in Primary liability coverage. That means if someone gets injured, if their property is damaged etc at your property during their stay you're covered.
This program is actually underwritten by a third party insurance company so it is a more legitimate insurance coverage for hosts which is great.
I don't have any personal experience with claims through this program (thankfully) so I can't offer any first hand experience with it.
Why you need independent insurance
First and foremost, you need to protect what is most likely your most valuable asset. If you can't rely on the host guarantee to protect your property, you need to look elsewhere. The other major problem with the host guarantee is that it does not insure for loss of income.
That means that if a guest throws a party, thrashes your space, floods the basement etc and your property is untenable for any period of time, you won't be paid for the lost income. So lets assume the absolute worst case. You have significant damage to your property worth thousands of dollars. Airbnb decides not to pay you because they can and now your property is untenable for 3 months.
You have to pay for repairs, take a hit for 3 months of income and probably pay your mortgage in the meantime. How many of you could take that kind of financial hit?
While that focuses on the worst case scenario, that is exactly why we get insurance. You don't buy insurance for the good times, you buy it for when the worst happens.
In some areas, you are required by law to hold your own public liability insurance. If you do not then it can only make an already bad situation even worse for you.
What companies provide insurance to Airbnb hosts
Unfortunately, not all insurance companies will provide you with Airbnb insurance. Even if you have a current landlord insurance policy with them, you may not be covered for short term renting.
Here is a list of companies that provide short term rental insurance in Australia. They are in no particular order and I am not associated with any of these companies in any way, nor do I endorse them as a product.
NRMA Insurance (Share Cover)
Share Cover by IAG
Aspire Insurance
Rentcover
ACS Financial
There are many other options out there, but please make sure that whatever option you choose that you double and triple check that it covers you for short term renting.
P.S. If you're looking to take your Airbnb earnings to the next level and implement the same strategies the big hotels have been using for years to dominate the market...