How Does Airbnb Insurance Work for Homeowners?
AirCover by Airbnb provides automatic property damage and personal liability protection to Airbnb hosts at no charge. While free is nice, there are several holes in AirCover's coverage that can concern homeowners. Specifically, coverage is not extended outside active bookings, for weather-related damages, to select personal belongings and more. For this, you'd need homeowners insurance or renters insurance.
Renting out your space is a great way to supplement your income but if you do so regularly you'll need commercial landlord insurance. Keep reading to learn more about Airbnb's AirCover and how buying additional home-sharing insurance can adequately protect your home and its contents year-round.
How Airbnb Home Insurance Works
AirCover is free property damage and liability coverage for Airbnb hosts. These coverages already existed before AirCover's introduction in November 2021 — Airbnb consolidated both types under one name and sprinkled in a few more benefits.
Here's a run-down of how you're protected under AirCover:
Host Damage Protection: Airbnb will reimburse you for damages up to $1 million caused by your guests, their pets or one of their invitees (e.g., a guest invites a friend while staying in your home). Airbnb also covers certain deep cleaning costs incurred after your guest's stay, such as odor removal and steam cleaning services.
Host Liability Insurance: AirCover offers up to $1 million in host liability coverage if your guest is hurt during an Airbnb stay or an Experience — when you host an in-person or online activity for your guest. Eligible expenses include claim investigation costs and legal fees that arise from a lawsuit.
Income Loss: Airbnb reimburses you for lost income if future bookings are canceled due to covered property damages within the past 14 days.
Free but Limited Coverage
While AirCover offers some impressive coverages, there are concerning holes in your protection. Therefore, you'll need to buy the proper insurance to cover your assets.
Only Guest-Related Damages are Covered
AirCover's host damage protection only covers damages only caused by your guests, invitees of your guests and their pets. It will not protect you against other types of risks, such as natural perils typically covered under a standard home insurance or landlord policy covers (e.g., fire, lightning, windstorms, falling objects).
You're Vulnerable Between Bookings
AirCover provides coverage only throughout your guest's stay. If you book a guest in January and don't book again until December, those vacant months in between are not covered if somebody breaks in or a tree branch falls on your roof (assuming you're not carrying regular homeowners insurance).
Select Valuables are Not Covered
AirCover does not extend coverage to certain property, including currency, weapons, security cameras, antiques, paintings and other fine arts. You will not be reimbursed if you file a damage claim for these excluded items and there is no option to buy additional coverage.
You're Only Reimbursed at Actual Cash Value
For property damages, AirCover only reimburses you for the item's actual cash value — its value after physical depreciation. Conversely, insurance carriers may offer replacement cost coverage (at an additional cost), which reimburses you for the item's current market value.
Are You Covered For Experiences or Not?
Airbnb advertises that AirCover provides coverage when you host an Airbnb Experience but a deeper look at their terms says otherwise.
While free coverage is always welcome, these contradictions are concerning. As a host dealing with an upset guest, the last thing you want is to discover a claim you thought was covered actually is not.
AirCover is NOT a Substitute for Home Insurance and Renters Insurance
AirCover is a welcome line of protection — other home-sharing platforms offer zero coverage. Still, AirCover was not meant to replace regular insurance, and Airbnb agrees:
"While AirCover protects you while you're hosting an Airbnb stay or Experience, it is not a substitute for personal insurance."
It may be more helpful to think of AirCover as backup protection and not your core coverage.
That said, does regular home insurance cover home-sharing property? It can, but at an additional cost. You'll likely need to buy a home-sharing insurance rider or a landlord policy to have proper insurance coverage. Carrying a personal home or renters insurance or even a commercial landlord policy can plug the many holes left exposed by AirCover. It's always a good idea to speak with your insurance agent about your Airbnb activities to make sure that you're fully insured.
Does Standard Home Insurance Cover Airbnb Properties?
If you rarely rent out your home, your homeowners insurance on the property may cover the cost of damages and losses caused by a guest, but if you rent out your home one-too-many times, your home and belongings may not be covered. It's best to speak with your insurance agent about how your carrier defines "one-too-many times." To err on the safe side, add a home-sharing endorsement to your homeowners insurance.
What Is Home-Sharing Insurance?
Home-sharing insurance is coverage that protects hosts who rent out their primary residences on Airbnb and similar short-term rental platforms. Although home-sharing coverage beyond AirCover is an additional cost, plugging the holes in your defense can be worth it.
Home-sharing coverage typically takes one of two forms:
Home-sharing endorsement: Also called an insurance rider, an endorsement is an add-on to your existing home insurance policy. A home-sharing endorsement should provide similar coverages to AirCover, including liability, theft, property damage and more. Similarly, coverage typically applies only during the duration of the guest's stay.
Commercial landlord Insurance: If Airbnb accounts for a notable portion of your annual income, then landlord insurance may be necessary. Insurance carriers, like Liberty Mutual, recommend landlord insurance, which provides coverage for the dwelling structure, your personal belongings, lost rental income and personal liability claims.
Home Sharing Endorsement vs Landlord Insurance
The home-sharing insurance solution you need will mostly depend on how frequently you rent your property.
If the space you're renting is your primary residence — you live in it the vast majority of the year — then a home-sharing endorsement should be enough. With a home insurance rider, your regular home insurance provides your basic coverages against named perils (e.g., fire, windstorm, falling objects) plus the additional coverage that applies solely to Airbnb stays.
Commercial landlord insurance may be necessary if you run a full-time Airbnb and the unit is a secondary home or investment property. With landlord insurance, you have property damage and liability coverage, like a home-sharing endorsement. You also gain coverage for your property against named perils, like standard home insurance.
What About Overlaps in Coverage?
Whether you file a claim through Airbnb or your home-sharing insurance provider will depend on your carrier. Your insurance company can replace AirCover entirely and you may be required to file all insurance claims with your insurance carrier. Check the terms and conditions of your insurance policy.
How To Get Airbnb Insurance
Responding to the boom in the short-term rental industry, several insurance companies have developed coverage plans for homeowners who rent their spaces through Airbnb or another home-sharing platform:
HostAdvantage by Allstate is a home-sharing insurance endorsement for up to $10,000 in coverage for property damage and theft during guest rentals.
Safely Insurance covers your home's structure, contents and guest injuries up to $1 million. Claims can be filed in five minutes with 80% of them fulfilled within four days. Coverage starts at $8 per night.
Erie Insurance offers home-sharing coverage ranging from $100,000 to $1 million for property damage, theft and liability claims. Rates start at $40 to $60 per year.
Proper Insurance offers personal, commercial, tenant and unoccupied coverage options plus up to $2 million in commercial general liability coverage. Policyholders also get reimbursed for damages at replacement cost value (no deductions for depreciation).
Verisk Analytics ISO sells home-sharing insurance that covers liability, theft, vandalism and other risks homeowners face when running a short-term rental business.
Warning: Insurance carriers may only provide coverage if you're renting out your primary residence and will not cover vacation homes or secondary investment properties. Be sure to double-check with your provider.
Airbnb Laws by City and State
The regulations for Airbnbs and short-term rentals vary by city and state. Below, we break down home-sharing regulations in popular locations. Be sure to also double-check your city's current laws for COVID-19-related home-sharing restrictions.
Quick note for renters: While Airbnb does not restrict renters from subletting their space, their landlords might. If your city requires you to register your home-sharing unit, renters may need to provide proof that their landlord has permitted them to conduct short-term rentals.
Homeowners in Los Angeles and San Francisco must register their Airbnb with the city and are subject to certain requirements.
In Los Angeles, homeowners can only rent a portion of their home for up to 120 calendar days. Beyond 120 calendar days, homeowners must apply for extended-home sharing registration, which is subject to additional requirements. Application and renewal fees differ for regular home-sharing ($183) and extended home-sharing ($982).
In San Francisco, unhosted rentals — you are not present during your guests' stay — cannot exceed 29 consecutive nights, or 90 nights total per calendar year. For hosted rentals, you can rent your unit for 29 consecutive nights for an unlimited number of nights per calendar year. A $450 application fee applies.
Denver homeowners can only rent out their unit for 29 consecutive nights. The governing agency does not specify a maximum number of calendar days you can rent out your unit, like Los Angeles or San Francisco. There is a $50 application fee and a $100 annual license fee. If the unit you're renting out is not your primary residence, you must obtain a lodging facility license. For longer stays, you'll need a landlord policy.
In Honolulu, short-term rentals qualify as bed and breakfasts or transient vacation units.
For Honolulu bed and breakfast homes (B&Bs), you can only rent up to two rooms, host a maximum of four guests and must be present during their stay. Honolulu also places a maximum on how many B&Bs are allowed in a given area.
For transient vacation units (TVUs), guests can stay in your unit without your presence. However, TVUs are only allowed in resorts and certain apartment-zoned districts.
For standard hosts that want to rent out a room temporarily, you will need to register your shared housing unit with the city and pay a $125 registration fee.
If you're operating a vacation rental — the entire dwelling unit with six or fewer sleeping rooms (not just a room) is available for rent — then you must carry home-sharing insurance with at least $1 million in general commercial liability and pay a $250 license application fee.
New York probably has the strictest requirements surrounding Airbnb laws. You can only host two paying guests for fewer than 30 days and you must be present during their stay. Also, guests must have access to every room and exit. Doors cannot have key locks. To rent longer, you'll need other insurance coverage than what Airbnb provides, like landlord insurance.
You can host a guest for 29 consecutive nights. The maximum occupancy is two persons per bedroom with a maximum of 12 persons. Be mindful that you must pay $136.17 for a Certificate of Use and your short-term rental space must undergo inspection. For a longer stay, you'd need a landlord policy.
Home-Sharing Insurance Can Protect Your AirBnB
Renting out your home using home-sharing platforms, like Airbnb, can be great for making extra cash. However, damaged property, liability expenses and other risks can quickly eat into your profits without the right insurance.
While AirCover is free and nice to have, you will need home insurance. SmartFinancial can help you find a low homeowners insurance policy along with a home-sharing endorsement that has the protection you need. Enter your zip below, and we'll provide you with free insurance quotes in minutes.
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