Airbnb & Insurance: A Few Words On Protecting Yourself
Most people are aware of Airbnb's $1 million insurance Host Guarantee program. And, for those that are not, Airbnb claims to insure homeowners for up to $1 million in damages if something happens while a host is away. While a lot of people are familiar with the NYC orgy incident most issues are more dull, and involve a broken table, a broken leg, or for us- a guest running their car into a garage door to the tune of $2400 bucks. (For the record, we got that money back, but not without effort.) Regardless the scale of the damage, we think it's important that you are realistic about Airbnb's coverage and are smart about protecting yourself financially.
Before we get into that though, a note on relationships. We aim to be transparent about our relationships, so please be aware that we have financial agreements with Airbnb, Slice and Proper Insurance (all of which we are about to discuss.)
First things first, Airbnb. Airbnb claims to compensate up to $1 million in damages. We don’t think that you should not rely on this promise and cover yourself with additional insurance products. There are a few reasons we recommend this: 1.) Airbnb recommends it; 2.) their insurance doesn't cover cash and securities, pets, personal liability or shared or common areas; 3. Airbnb has divided loyalties since they need both hosts and guests to survive and 4. the policy is designed for "rare incidents" and does not include normal wear and tear- and, frankly, there’s a lot of ways to interpret that language.
Without insurance products, there are a few ways to cover yourself: namely, screen your guests and utilize the security deposit option. You can screen guests by checking their past reviews and driver’s license and social media verification. Second, you can require a security deposit. A note on this: while security deposits protect you from damage, they may limit the number of guests interested in staying at your place (some people may not be that psyched about having to pony up additional deposit money even if they will get it back).
But what about your homeowner’s insurance? It doesn’t cover commercial enterprise and may tell you stop renting your place on a short-term site if they get wind of what you are doing.
Which finally brings us to Proper Insurance and Slice. Proper Insurance acts as homeowners’ insurance that also cover short-term rentals. They have a monthly premium and pay out claims. Slice calls itself on-demand insurance and offers products for home shares, ride shares and other contract work (think handymen, dog walkers, etc.) Slice is not a full blown homeowner’s policy, but covers you for certain dates. You text them when your guest will be staying and you are covered for those days- no more, no less.
We think it’s important that you protect yourself, but also that you don’t let the possible risk deter you. If someone breaks your chair and you aren’t covered by insurance, that sucks, but in our experience, you’ll have more than enough money to buy yourself a new one.
Good luck and email/text/morse code us questions or comments.
Disclaimer: While we aim to provide useful content gathered through interviews with city officials, we are not attorneys, insurance brokers or tax professionals. This information may not be exhaustive and should not be relied upon when making investment decisions. Before beginning any investment strategy, you should consult a legal or tax professional.