Renting a home, a portion of your home or a dedicated rental house as a short-term rental on Airbnb has become increasingly popular and comes with several advantages. The vacation rental industry can be a great way to make extra money, or can even become a full-time occupation. But it’s important to consider home insurance needs for short-term rentals.
Bankrate’s insurance editorial team has researched the short-term rental market, focusing specifically on Airbnb’s guidelines. Our analysis may help you understand Airbnb’s regulations for insurance, if you need additional coverage and where to buy a home-sharing policy.
Does homeowners insurance cover Airbnbs?
Your homeowners insurance might cover Airbnb losses, depending on the specific underwriting guidelines of the company. However, if you’re planning to rent your property on Airbnb year-round, you will likely need to purchase a separate insurance policy specifically designed for home-sharing. Technically, you would be operating a business out of your home, and standard home insurance policies don’t cover losses associated with properties used for business purposes.
According to insurance and financial expert Laura Adams, “If you’re thinking about renting out your home or investment property on a home-sharing site, such as Airbnb, you’ll need to reevaluate your insurance. Using your property for business purposes is something your insurer needs to know about, so never hide it from them.”
Your home insurance policy might extend coverage to Airbnb rentals if you rent the home infrequently, like once every few months. This will vary by company, however, so talk with your agent before formally renting your home. Based on your policy, any property damage, theft, liabilities or vandalism may be covered by insurance. However, you might be required to notify your insurance company each time you have guests.
Many Airbnb hosts choose to purchase coverage through the Airbnb company, which may ensure there aren’t any gaps in coverage. “In some cases, if you only have an occasional, short-term rental, you may be covered by an existing home insurance policy. But it’s more likely that you’ll need Airbnb coverage as a host, in addition to additional insurance for running a business from home,” says Adams.
What does Airbnb’s insurance cover?
Airbnb offers hosts two types of insurance for damage and liability risk. Both policies are designed to financially protect hosts and renters. Here’s what each policy covers:
Host damage protection
Host damage protection will reimburse you up to $1,000,000 if a guest damages the inside or outside of your property, including personal belongings and appliances. It does not cover bodily injury to guests or other people, theft of cash or securities or damage from wear and tear. Here’s what it can cover:
- Damage to your home caused by guests.
- Damage to your personal belongings caused by guests.
- Lost income if other bookings had to be canceled due to unexpected guest damages.
- Cleaning due to guest damage caused at your place.
Host liability coverage
Host liability is essentially Airbnb liability insurance. It offers up to $1,000,000 in bodily injury liability coverage if a guest is injured on your property during their stay. It also includes coverage for a guest’s property that is damaged or stolen during their stay. Here’s what this policy type covers:
- Bodily injury liability for guests and other people.
- Property damage coverage for guests’ personal belongings.
- Property damage in common areas, like building lobbies, caused by a guest.
Where to find insurance for Airbnbs
If you don’t want to rely on Airbnb insurance coverage, you can also find home-sharing insurance from private property insurers. Here are some providers that offer home-sharing insurance:
- Proper Insurance
Some insurance companies sell standalone home-sharing policies, while others offer endorsements for your homeowners insurance. “Depending on your insurer and home state, you may need a home-sharing rider added to your home policy. Or it may be more cost-effective to have a separate commercial insurance policy. Before you have your first guest, speak with your insurance company, and make sure you won’t have any coverage gaps that put you at financial risk,” suggests Adams.
Before you buy an Airbnb insurance policy, understanding how much coverage you need can be important. Adams adds, “Having strangers staying in your property means an increased risk of theft, damage and liability. If you don’t have enough insurance and a guest gets injured, you could get involved in a lawsuit and be responsible for expensive medical costs.” Working with a licensed insurance agent could help determine the proper amount of coverage to purchase.
What about other rental sites?
If you rent your home through a site other than Airbnb, you might still need to have some type of short-term rental insurance. Here are the insurance coverage considerations from other popular home-sharing platforms:
- VRBO: VBRO provides $1 million in liability coverage for stays that are processed through the HomeAway checkout platform. The policy does not include coverage for damage that tenants cause to your property.
- FlipKey: While FlipKey doesn’t offer its own insurance policy for hosts, it does suggest that hosts talk with their insurance agents about their needs so that hosts have adequate financial protection.
- Onefinestay: Onefinestay has an insurance policy for hosts, which covers theft and damage. However, the company does recommend that hosts check their existing policies for coverage and notes that hosts do have the option of purchasing their own coverage.
Frequently asked questions
What other types of insurance should I consider for my Airbnb?
Whether you have Airbnb insurance through the company itself, or your home insurance provider, or another company, you might still have some gaps in coverage. For instance, if you own a home in California or another earthquake-prone location, you may want to consider purchasing an earthquake insurance policy.
The same goes for homes in flood-prone areas. You could look into a flood insurance policy from your home insurance provider or from the National Flood Insurance Program (NFIP). Just be sure to confirm the coverage extends to rental homes.
Is Airbnb insurance automatically included when I sign up?
No, Airbnb’s insurance policies are not automatically included when you sign up to be a host. If you want coverage, you might want to consider getting your policy set up before you start renting.
Do my guests need to have renters insurance?
No, your Airbnb guests don’t need to have a separate renters insurance policy. If they have renters, condo owners or homeowners insurance policy on their primary home, coverage for their belongings likely transfers to a short-term rental in the same way it would to a hotel.