According to Aviva, 51% of Canadians don’t know home insurance doesn’t provide Airbnb insurance coverage for short-term guests. While listing your spare bedroom or entire home when you’re away through a short-term rental platform can be a lucrative side hustle, it also turns your home into a business property.
When you sign up for home insurance, the insurer assumes that you and your family will occupy your home, not unsupervised strangers. If you turn your home into an Airbnb listing, you’ll need a special policy that covers short-term rentals.
We will explore Airbnb home insurance concerns you must consider before turning your space into a rental unit.
Key Takeaways:
- Your standard home insurance policy probably doesn’t cover short-term rentals. If you don’t properly notify your insurance provider, your policy could be cancelled, and you may be stuck with hefty bills if any issues arise.
- While Airbnb does provide host insurance coverage, it’s not a substitute for a personal home insurance policy.
- Having unsupervised guests in your home provides an additional risk. You want to find a home insurance policy that explicitly covers home-sharing.
Does Your Home Insurance Cover Airbnb?
Does my home insurance cover Airbnb? This will likely be the first question on your mind as you list your space, and the answer is probably no. If you use your residence for commercial purposes, your insurance policy may become void. Some insurance providers may even opt not to offer you insurance or cancel your policy if they discover you’re hosting your home on a short-term rental platform.
Even though Airbnb touts home insurance protection, the reality is that it’s not a substitute for personal home insurance. If you don’t inform your home insurance company that you’re listing your space on Airbnb, you could make yourself vulnerable to legal issues, expensive bills, and loss of income – or your provider could drop you completely. Many home insurance providers will decline to offer you coverage if you frequently host unsupervised guests.
Your risk profile completely changes when you list your home on a platform like Airbnb, where strangers can stay for days. You don’t want to end up with major issues because you want to earn a few extra dollars from renting out your basement.
Your home insurance policy is customized for your unique situation based on what you want to be protected and the level of coverage you’re comfortable with. Turning your home into a commercial property will most likely violate the terms of your policy.
What Insurance Does Airbnb Provide?
Does Airbnb insure your home? The Airbnb home insurance protection for hosts automatically kicks in as soon as you create your listing. However, there are large gaps and issues with Airbnb insurance coverage (called AirCover), and filing a claim could be complicated.
AirCover for hosts offers two types of protection:
- Host damage protection – Hosts can be reimbursed up to $3 million USD if their home or personal belongings are damaged by an Airbnb guest during their stay. You could also be reimbursed for the additional cleaning required.
- Host liability insurance – Hosts are provided with $1 million USD worth of coverage if they’re legally responsible for guests’ injuries or if any of the guests’ personal property is stolen or damaged while staying at their place.
Here’s where things get tricky with Airbnb home insurance. You have to act promptly when your home gets flooded or damaged due to a guest’s actions. You’ll need to contact your insurance provider to have the issue handled immediately. If your property damages nearby buildings or units, multiple insurance providers could be involved. Your home insurance provider could also present concerns if they discover your home was rented out to unsupervised strangers who caused the damages.
If an incident occurs, you might need to pay your deductible, and collecting it from the guest may be difficult. For example, even if your insurance covers the damages caused by the guest and Airbnb reimburses you for a portion, you may still have to pay the deductible, which could be $1,000 and less than you ever earned from the stay. Then you have to factor in that repairing the damages could take weeks or months.
How to File a Claim Through AirCover
Airbnb has its own step-by-step system when it comes to filing a claim:
- Document any issues with photos, videos, and receipts. Gather any repair or cleaning estimates
- File a reimbursement request in the Resolution Centre within 14 days of the guests’ checkout
- The guest will have 24 hours to respond to your requests. If the guest doesn’t offer payment, you can file a reimbursement claim under Host damage protection. Airbnb Support will assess your request as the next step.
Issues With Airbnb Insurance Coverage
There are a few significant issues with Airbnb home insurance coverage:
- You must request reimbursement from the guest, and there is no guarantee that the guest will admit to the issue or that they will have the resources to cover the damages
- It can be challenging to prove that the guest was at fault. For example, the guest could dispute your complaint and say they didn’t notice the dishwasher leaking.
You must remember that a stranger staying in your home for the weekend may not be as diligent as a long-term tenant who wants to live in the unit for a year or more. While your tenant may report a leaky toilet or instantly notice that the dishwasher isn’t working, a short-term guest may not see or take the time to report any issues.
Airbnb Insurance Doesn’t Replace Your Policy
When you read about AirCover, you may feel this coverage is enough, but that’s false. Even Airbnb recommends that you have additional insurance in place. The Airbnb website states, “While AirCover for Hosts protects you while you’re hosting an Airbnb stay or Experience, it’s not a substitute for personal insurance.”
What is Short-Term Rental Insurance?
Short-term rental insurance or home-sharing insurance is for guests who aren’t considered longer-term tenants in your home. When you have a tenant living on your property, you may typically purchase a homeowners’ policy for the unit’s structure and then ask your tenant to get renters insurance.
Short-term or home-sharing insurance is for landlords who rent out their home or vacation property for a shorter period than a typical one-year lease. Changes in occupancy will impact coverage as your risk changes, so you want to update your insurance provider to ensure adequate coverage.
According to Aviva, home-sharing insurance will help with the following protection:
- Damages or losses to structure or personal property caused by a guest
- Damages or losses to a guest’s property up to $1,500
- Loss of rental income from the short-term rental due to a covered claim
How to Insure Your Airbnb or Short-Term Rental Property
“What home insurance do I need for Airbnb?” This is likely what’s on your mind as you read this article. Here are your best options:
- Contact your home insurance provider to see if they offer protection. If you’re only listing your home on Airbnb when you travel or for a few months during the summer, you could see if your provider will allow this.
- Find a short-term rental insurer. Your best options in Canada are Aviva or Square One, as they specifically offer home-sharing insurance.
There are various options when seeking insurance for short-term rentals. For example, you could get Airbnb home insurance with TD, but you’ll have to notify them of your listing, and you could be charged more if you exceed a certain number of days.
Final Word on Airbnb Home Insurance
Before allowing strangers into your home, you must understand the insurance risks of home-sharing. While it’s true that Airbnb does offer insurance, it’s worth pointing out that it comes with many gaps in coverage. The best way to avoid any issues is always to be fully transparent with your insurance provider. If your home insurance company informs you that they don’t offer short-term coverage or it’s expensive, then you’ll have to find a specific home-sharing insurance policy.
