The beauty of owning a short-term rental in the Digital Age is that vacation rental websites do almost everything for you. Platforms like Airbnb, TripAdvisor and the like make promoting, booking with and managing your vacation rental business a cinch. Most of these platforms also offer insurance coverage at little to no cost to you as a built-in benefit of using their services.
But what if we told you that these free host liability insurance policies could be leaving you and your vacation rental business vulnerable to the unthinkable? In other words, the free host liability insurance policies provided by vacation rental websites have major gaps in coverage that could put your business, your property and your income at risk.
Let’s be clear: these free host liability insurance policies are a great place to start and can provide a little peace of mind when protecting your property. But are you fully protected? Absolutely not. Here’s why.
The Basics: What is a Host Liability Policy?
A host liability policy refers to the coverage that vacation rental websites offer to protect hosts from third-party claims of bodily injury and/or property damage. For example, if a guest trips and falls while staying in your home and sues you, Airbnb’s Host Protection policy will cover up to $1 million in third party liability claims (more on that later).
That sounds all well and good, right? If the platform you use to list your vacation rental provides you with $1 million in coverage, shouldn’t that be good enough?
The problem with these policies, however, is that they have many exclusions…exclusions you may not realize could be problematic until it’s too late. Let’s take a closer look at the specific free host liability policies from one of the biggest players in the vacation rental game around: Airbnb’s Host Guarantee and Host Protection policies.
Mind the Gap: Airbnb’s Host Guarantee & Host Protection Policies Have Major Holes in Coverage
Airbnb provides both a “Host Guarantee” and a “Host Protection” policy to its users as an added benefit of using the platform. The Host Guarantee is designed to cover property damage caused by guests. The Host Protection program provides up to $1 million in primary liability coverage for a guest’s bodily injury or damage to their property.
What more could you want, you might wonder? The truth is, a lot.
Airbnb’s Host Guarantee and Host Protection policy have a major list of exclusions including:
damage caused by acts of nature
damage caused by pets
property damage due to pollution or mold
loss of business income
aircraft, auto, mobile, watercraft equipment
While these policies do provide some coverage for your vacation rental, you might find yourself footing the bill for certain issues you never would have anticipated. Consider this scenario that highlights how solely relying on these free Airbnb policies could cost you a pretty penny:
Even though you advertised your listing as “pet-free”, a guest still brings Fido, a 50lb black lab, with them on vacation. Unfortunately, Fido rips up your couch cushions, leaves deep gouges in the bedroom door and tracks muddy paw prints all over your carpet. Airbnb is explicit in that they won’t cover pet damage, so your claim will most likely be denied. What’s more, they won’t cover the business income you will most likely lose as you put your rentals on hold to make the necessary repairs.
This is an extreme example, of course. But, as Airbnb admits, “The Host Guarantee is not insurance and doesn’t replace your homeowners or renter’s insurance.”
Fact: Neither Booking.com or TripAdvisor offer any liability insurance for property owners. In these cases, you may consider setting up a damage deposit. Full disclosure: This tactic could pay for some unexpected expenses, but you may miss out on potential bookings from guests who are wary of paying deposits.
Airbnb's Host Protection insurance policy, meanwhile, appears to be a suitable line of defense should a guest become injured during their stay on your property. But what if you offer a paddleboat for your lake as part of the guest experience? Since Airbnb doesn’t cover this kind of amenity, you’d be on your own if a guest comes forward with a lawsuit after injuring themselves while using it.
The reality is that the free host liability policies offered by services like Airbnb have significant gaps in coverage that could have you staring down major losses.
The Bottom Line? Always Read a Liability Policy’s Exclusions
No matter what vacation rental website you use to list your property, always read the full terms and conditions and the list of exclusions contained in the host liability insurance policy. Free liability insurance policies are great to have, but they can’t guarantee that they’ll have your back in the event of an incident you can neither predict nor prepare for.
Vacation Rental Insurance: Complete Coverage for Vacation Rental Businesses
Vacation rental insurance is specialty coverage designed specifically to protect you from the unique risks you face as a property owner or manager. It’s called “comprehensive coverage” for a reason: it offers complete coverage, including (but not limited to) commercial general liability, personal liability, business income, property damage, personal/advertising injury, theft, and so much more.
While a free liability policy provides some protection (plus it’s free!), it simply doesn’t give you the complete coverage that a vacation rental insurance policy does.
Start with a Host Liability Policy, Go the Distance with Vacation Rental Insurance
The vacation rental industry is booming, which is good news for property owners. Thanks to the various vacation rental listing platforms available, taking advantage of this opportunity is easier than ever before. While using these platforms is a no-brainer for growing your business and boosting your income, you can’t fully rely on them for insurance coverage. When it comes to liability insurance that full protects you, free "Host Guarantees" leave much to be desired and could in fact be leaving you in the lurch.
Don’t just “mind the gap” when protecting your vacation rental. Fill the gaps in your current coverage with a FREE coverage comparison during a personal, one-on-one consultation with a CBIZ Vacation Rental Insurance expert. Request a consultation today!