Airbnb Hosts, Listen Up! Understanding the Importance of Insurance for Airbnb Properties in 2024

Some people might think that renting properties on Airbnb is a quick way to get passive income. However, to ensure you make money (and don’t lose it), you need to invest time, effort, and money into your properties. This includes protecting your homeowner’s investment and your business.

One of the most important investments you can make is Airbnb host insurance. By this we don’t mean simply the AirCover that is offered through Airbnb. The right insurance policy can protect your properties and your income — and to really protect yourself, you need to go beyond the host insurance offered by Airbnb.

What Is Airbnb Host Insurance?

Most homeowners insurance policies don’t cover your home if you’re renting. Renting properties to short-term guests opens you up to potential legal liability, and it also increases the likelihood of accidental damage to your home.

For example, if an Airbnb guest is injured on your property and you have no insurance, you may be held personally responsible for medical costs and other damages. When you have commercial insurance, your policy should financially cover you.

Host insurance isn’t limited to liability coverage. Many policies will pay to cover accidental damage caused by guests, and some will cover theft and burglary.

What Kind of Insurance Does Airbnb Offer Hosts?

If you’re already familiar with hosting on Airbnb, you know that the platform offers the AirCover for Hosts package, a free package that every host receives (unless they opt out). AirCover is not technically insurance, although it operates much like an insurance policy.

AirCover for hosts includes both liability coverage and damage protection coverage, but there are hundreds of exclusions and on the whole, Airbnb typically sides with the guest rather than the host. Hosts get $1 million worth of host liability protection per stay and up to $3 million of Airbnb host damage protection. According to Airbnb, damage protection also covers very specific losses:

• Damage caused by guests’ pets
• Damaged valuables or fine art
• Deep cleaning
• Damage to boats or cars
• Loss of income (if bookings are canceled as you repair damage)

Notably, if a guest damages your property, AirCover requires you to try to work out the issue with the guest before filing a claim. This can be incredibly frustrating and time-consuming, especially if you manage multiple properties or are dealing with a difficult guest. Always read the fine print of your AirCover policy to ensure you understand the coverages included.

Should I Purchase Additional Short-Term Rental Insurance?

In short, yes, you should. Airbnb itself even says that hosts shouldn’t rely on AirCover as their only insurance. AirCover has plenty of exclusions, and these exclusions can vary by state.

Exclusions aren’t the only problem with AirCover. Even a quick skim through a forum for Airbnb hosts will show you countless stories from frustrated hosts. Many have complained that AirCover does not promptly resolve Airbnb host damage protection claims. When it does, reimbursements are often very low and may take months to recover.

It’s also important to remember that while AirCover does offer some benefit to hosts, it’s primarily there to protect Airbnb’s bottom line — not yours. It’s best to treat AirCover as a bonus layer of protection over your short-term rental insurance (and not as your only protection against damage and liability).

Short-Term Rental Insurance: A Must-Have for Airbnb Hosts

So how exactly do you find insurance that protects you? After all, most homeowners insurance policies won’t cover home-sharing or short-term rentals. Designed to give you the right coverage when you need it, Safely’s short-term rental insurance ensures that you, your home and its contents, and your guests are protected. The best part is Safely doesn’t require hosts to chase down guests for damages like other policies would.

However, if you purchase a short-term rental policy, this kind of insurance effectively fills in the gaps in your homeowners insurance. For instance, if you accidentally cause major damage to your home, your homeowners insurance will likely pay for repairs. If you rent your home on Airbnb and a guest causes major damage, your short-term rental policy will reimburse you.

How much is insurance for your Airbnb rental? When you consider the financial risk you face if you aren’t insured, it isn’t much. On average, short-term rental insurance will cost about $2,000 to $3,000 per year. Most property managers who have short-term rental insurance utilize a fee paid for by the guest to cover the cost of their annual policy. Therefore, the cost is offset with every reservation made and every guest stay is covered.

In many cases, the combination of your homeowners insurance, your short-term rental insurance policy, and AirCover is enough to keep you protected. However, each person’s situation is different. In some cases, you might be more comfortable with additional insurance. If you want to be as protected as possible, it may be worth considering the other types of policies below.

Other Kinds of Insurance to Consider

If you have some familiarity with insurance already, you know that even the combination of short-term rental insurance and AirCover still leaves some legal liability. You can close that coverage gap with some of the add-ons and separate policies below:

Umbrella Policies

An umbrella policy isn’t a stand-alone policy. Instead, it’s effectively an extension of your existing liability coverage. Let’s say your short-term rental policy has liability coverage up to $1 million. One of your guests is severely injured on your property, files a lawsuit, and is awarded $1.5 million in damages. 

In this case, you may be on the hook for the extra $500,000 above your policy’s limit. But if you purchased an umbrella policy extending your liability coverage to $2 million, you wouldn’t owe anything out of pocket.

Umbrella policies are generally a wise investment. You might think getting one will add a good bit to your existing Airbnb insurance cost. However, because few people need to actually use umbrella policies, they tend to have very low premiums. 

Commercial Property Policies

If you regularly host on Airbnb, you’re a business owner. And unless you live on the property you rent to guests, you might find that commercial property insurance is the best choice because your homeowner’s insurance typically won’t cover rental guests. Commercial property policies can simplify the insurance process, as they combine liability insurance and property protection into a single policy.

Safely offers commercial insurance that’s far superior than Airbnb’s Aircover. Safely also includes guest screening, an important step in further protecting your investment. As a company, Safely was started to help property managers and homeowners answer their two biggest questions: Who is staying in my home? and What if something bad happens?

Protect Your Business With Something More Than Airbnb Host Insurance

When you choose vacation rental insurance for your Airbnb properties, you’re doing more than just protecting your own investments — you’re also protecting your guests against unforeseen situations. With the right insurance policy, like coverage from Safely, you can rest assured that you’ll be covered. Get a quote from Safely today and see how easy it is to protect your properties.