Watch for gaps in your coverage
Some homeowners balk at paying extra for home-based business insurance, particularly when the short-term rental site they’re listed on already offers coverage.
For example, Airbnb offers Host Guarantee coverage, where hosts pay nothing extra for up to USD$1-million in coverage for any damage or destruction to belongings or property caused by a guest booking. “It’s a great perk, but there are gaps in coverage,” Mitchell warns. For instance, many types of personal belongings aren’t covered, such as furniture, electronics, artwork, antiques and collectibles. These coverage exclusions are stated plainly on the website, but many hosts end up missing this information. “Without a separate home policy, a homeowner could leave themselves susceptible to serious financial risk.”
Plus, not all cases of damage or destruction are cut-and-dry. While the Starks could easily prove that the weekend guest booking was the cause of their home’s damage, some property owners may have a tougher time, particularly if the damage or theft occurs between bookings. Like all insurance coverage, Host Guarantee does require documentation, such as photos and receipts, and, in extreme cases, a possible walk-through with an Airbnb customer representative.
“Short-term rental coverage only applies when guests book and stay at your place, but what if that guest accidentally leaves your doors unlocked?” suggests Mitchell. “There’s no coverage for damage or theft to a rental suite if a guest isn’t checked in.”
Damage caused by a pet isn’t covered, either— and let’s face it, not all guests are forthright about bringing Fido on their vacation.
Consider the legal implications
Then there’s liability coverage. This covers a homeowner in that rare event someone decides to file a lawsuit or claim against you for bodily injury or damage or loss of personal property. (Here’s an example of what might happen.)
Occasional landlords may feel safe if they use a short-term rental site that offers liability coverage, such as Airbnb’s Host Protection, or the USD$1-million in liability insurance offered by Vrbo and Home Away (which are owned by the same company). Through this coverage, homeowners can claim coverage for liability issues, like if a guest slips, falls and files a lawsuit. It would also cover any accidental injury caused by your rental guest—for instance, if they dropped a suitcase on the foot of a neighbour or another tenant in a condo building.
This site-specific liability coverage will also protect you against claims of loss or damage of a guest’s property, but only if that loss or damage falls within the Host Protection coverage limits. And there are loads of limits.