What Airbnb Hosts Need to Know About Renters & Homeowners Insurance

If you've decided to rent your home through Airbnb, you may be trying to dot your i's and cross your t's by making sure you're fully insured before strangers begin to stay on your property. After all, you want to know you're covered if there's a fire or someone falls while getting out of the shower.

You might be asking yourself how much insurance coverage you need to protect your assets and if there is Airbnb insurance available for renters and homeowners. Here, we'll look at what's covered by Airbnb insurance, when Airbnb's short-term rental insurance is not enough, and how the best homeowners insurance policy can help fill in coverage gaps.

The importance of Airbnb host insurance

Whether you're buying property for an Airbnb or you're a homeowner planning to rent out property you already own, the cost of hosting an Airbnb is not limited to housing costs alone. You must also consider what happens if someone gets hurt while staying at your Airbnb, the property is damaged by unruly guests, or theft occurs.

Airbnb insurance for renters

If the house, cabin, or condo you plan to use as an Airbnb is property you're renting yourself, you need to know if Airbnb renters insurance exists. Before looking into your renters policy to learn if it provides vacation rental insurance (or home-sharing insurance), read your original lease. Some leases forbid business activity in a rental property, even if it's short term. If you read your lease but still aren't sure whether it's permissible for you to use the property as an Airbnb rental, contact the property owner to find out. It's better to know in advance than to spend time and energy preparing for guests only to learn that you can't actually rent the property.

If the landlord has no qualms with you renting the home through Airbnb, check your renters insurance policy. Some renters insurance providers will not cover damages that occur due to a business in the home. Even the best renters insurance companies may limit how often your rental property can be used for commercial use, or refuse to cover any events stemming from commercial use. Read your contract to learn if your rental policy is comprehensive enough to provide Airbnb liability insurance. If there's any doubt, call your insurance provider to settle the matter. What you don't want to do is forge ahead, assuming you have sufficient coverage when you don't.

Does standard renters insurance cover Airbnb?

It would be unusual for a standard renters insurance policy to include Airbnb liability insurance. If you look at the issue from the perspective of the insurance company, it makes sense. After all, the more people that are in your home, the greater the odds of a claim. Someone could fall down the steps and break their leg, leave a candle burning and cause a fire, or allow their pet to bite another visitor. As guests arrive, they bring an entirely new set of risks along with them and it's difficult for insurance companies to calculate how those risks will impact their bottom line.

While the odd policy may offer some protection, it's important to know in advance how much coverage your renters insurance affords you. Airbnb home insurance is only as good as its coverage.

Airbnb insurance for homeowners

When a company insures your home, they assume that it will be used by you and your family. They don't imagine the space being used for business purposes, and typically, the homeowners insurance policy you purchase does not extend to cover any losses suffered due to that business.

Does standard homeowners insurance cover Airbnb?

Your standard homeowners insurance policy may offer limited coverage or none at all. It depends on the wording included in your policy. Some insurers view renting your home out through Airbnb as "doing business," and treat it like any business you might run from your home.

For that reason, they may be unwilling to extend your policy to cover business-related losses. The best way to know for sure whether your current policy will protect you against liability and loss is to read the document. If you're left with any question, call your insurance company for clarification. Then, find out what they recommend for customers involved in Airbnb. It may be as simple as adding an extra layer of coverage.

What is covered by Airbnb insurance?

When you rent your property through Airbnb you automatically receive protection against certain events (at no extra cost to you). Airbnb homeowners insurance covers situations ranging from bodily injury of a guest to property damage caused by guests. Airbnb home insurance is broken down into two packages: Host Protection Insurance and Airbnb's Host Guarantee.

Airbnb Host Protection Insurance

Airbnb provides up to $1 million in liability insurance against the following:

• Bodily injury to guests or others
• Damage to property owned by guests or others
• Damage to common areas (like the lobby of a condo) and neighboring properties caused by guests or others

Let's say you book a rowdy group and they decide to light fireworks in your yard. If those fireworks land on a neighbor's shed and cause a fire, this liability coverage should cover the loss.

Here's what Airbnb Host Insurance will not cover:

• Bodily injury to guest or others that you are legally responsible for
• Damage to property belonging to guests or others that you are responsible for
• Damage to common areas and neighboring properties that you are responsible for

In other words, Airbnb insurance will not cover you if the event that occurs is due to your negligence. Here's how that might work: Imagine that it's the 4th of July and you leave fireworks for your guests to enjoy. If the shed next door catches fire due to that decision, it will be up to you to cover the loss.

Airbnb Host Guarantee

Airbnb also provides hosts with their Host Guarantee. Host Guarantee is not insurance, but rather, a program sponsored by Airbnb to cover damage to personal belongings -- both yours and others.

While the Host Guarantee offers up to $1 million in coverage, there's a catch. You must attempt to recover damages from the guest before filing a claim with Airbnb.

Host Guarantee may cover these events:

• Physical damage to home caused by guests
• Damage to personal property caused by guests
• Damage caused by assistance animals

What the Host Guarantee does not protect against:

• Theft of cash or securities
• Damage caused by ordinary wear and tear

What type of coverage should I buy?

A closer look at both Host Protection Insurance and the Airbnb Host Guarantee shows how many potential holes there are -- how many different ways you could be stuck paying out of pocket if anything went wrong. Although you'll have to pay for it, you need renters or homeowners insurance with enough comprehensive coverage to fill the gaps in Airbnb-provided coverage.

For example, imagine that you accidentally leave your wallet at the house. In that wallet is your debit card, and on a lark, a young houseguest decides to make online purchases using your debit card. While it may be an issue you can take up with your bank, Airbnb insurance will not cover the loss.

Or maybe a child trips over a rug, falls, and breaks a tooth. The child's family wants you to be responsible for the dental bills. You turn to Host Protection Insurance, hoping they'll cover the bill. However, upon review, your claim is denied when the insurer determines that the fall is your fault. You should have done a better job securing the area rug.

What companies offer Airbnb insurance?

Adding extra coverage to your homeowners or renters insurance is one cost of hosting an Airbnb. Among the companies offering short-term insurance for Airbnb hosts are three of the most popular insurers in the country.

Allstate: With a rating of A+ from AM Best, the financially secure Allstate offers an add-on to their homeowners policy called HostAdvantage. HostAdvantage protects against damage to personal belongings up to $10,000 per rental period. They also offer Landlord Insurance that covers short-term rentals against theft and vandalism. Of the two policies, Landlord Insurance is more comprehensive, covering everything from dwelling protection to medical coverage and code renovation assistance.

Erie: One type of Airbnb insurance policy is Erie's Home Sharing Coverage. This add-on to your regular policy covers your primary home against property damage, theft, and liability claims. Depending on the type of property you rent and where it's located, the premium could be as low as $40 to $60 annually.

Nationwide: Nationwide also offers supplemental coverage that protects your valuables against damage and loss. Like the rest of Nationwide's insurance products, you can save money by bundling with other types of coverage.

For many, being an Airbnb host is a win/win situation. You get to meet new, interesting people while also earning money for the use of your property. Before welcoming that first renter, though, have a discussion with an insurance agent about which level of coverage is right for you and learn how much it will cost for additional coverage to your homeowner's insurance or rental property insurance policy. That way, you can rest easy knowing that your Airbnb property is protected.