Airbnb is still relatively new to the Australian insurance sector. Very few insurance companies have adjusted their offering to include Airbnb insurance, leaving hosts exposed to the risk of financial loss due to either property damage or a claim from an injured guest.
A survey by insurer IAG showed that 54% of Australian hosts are unaware of how their home-share activities are covered by their insurers…if at all. Which leaves many hosts at the mercy of Airbnb to decide whether to remedy property damage caused by guests.
Even more frightening, is that Airbnb activities will void your public liability cover under standard home and contents policies. This means you are liable for all legal costs incurred in a personal injury claim.
Why doesn’t standard insurance cover Airbnb activities?
Home and contents insurance is specifically tailored to home owners who reside in their own home and extends to their visiting guests. It does not include guests using your home as travel accommodation.
Standard landlord policies require a lease of 90 days or more. They also don’t support the use of the home for short-term holiday letting. In fact, most insurers regard short-term home-sharing as ‘commercial or business use’ with a higher risk of making a claim.
Insurance providers will cancel your policy if they find out you are renting through an online platform like Airbnb or Homeaway, simply because their insurance cover is no longer adequate for your requirements.
What protection does Airbnb offer?
Airbnb offers hosts two types of insurance cover: Host Protection Insurance and Host Guarantee. Their products shouldn’t be considered a replacement for home and contents or landlords insurance, but they do offer hosts some protection against property damage.
Host Protection Insurance
Airbnb offers ‘Host Protection Insurance’ in partnership with Lloyd’s of London and Zurich. Each host is provided with up to $1 million USD in third party liability cover. It protects the host if a guest is physically injured, or your guests property is damaged or stolen during their stay at your property.
The reality of this insurance cover, is that property damage claims are not guaranteed. All claims are at the discretion of the Airbnb customer service team and must be accompanied by clear video or photographic evidence.
Although liability insurance claims are rare in the world of Airbnb, they do happen and this insurance does not offer adequate cover in the case of personal injury. Liability claims that are not covered include: intentional acts to harm the guest, loss of rent if your guest cancels or checks-out early, bacterial or fungal related injury or illness from communicable diseases, war or acts of terrorism, product liability (e.g. bathroom amenities), chemical pollution from asbestos, lead or silica, liquor liability, assault and battery, electronic data and certain (unspecified) personal property.
You are only covered for the time of the booking, so if the guest injures themselves outside of check-in and check-out times, liability passes to you. Any damage to the hosts personal property is not covered and building damage cover is not guaranteed.
Airbnb offers a ‘Host Guarantee’ of up to $1 million USD of property damage protection for every Airbnb listing. This protects damage to the hosts property and possessions. Exclusions are third party personal injury, damage caused by pets, damage to common areas, theft or damage to jewellery, artwork or collectables. These excluded items will need separate insurance.
Terms and conditions are subject to change and limitations include:
- The host must attempt to resolve the property damage issue with the guest
- The damage must have occurred during the booking period only
- The damage must be reported within 14 days and supported with video or photographic evidence
- Payment is the cash value according to Airbnb, not the actual replacement cost
- The host must be in compliance with their Airbnb contract prior to damage.
Due to the many exclusions and limitations of these two products, more comprehensive cover is gained from having separate Airbnb insurance. However, hosts can still benefit from Airbnb’s cover, because any claims that are settled through the platform, saves the host from paying an excess fee with their insurer. It also keeps insurance premiums low, if the number of claims you make are kept to a minimum.
Where in Australia can I get Airbnb insurance for my rental property?
Airbnb is growing significantly in Australia, so it’s surprising to see some of our largest landlord insurance specialists such as Terri Scheer, avoiding the short-term rental market.
Not all hosts require landlord insurance, because they only rent a room or self-contained granny flat part-time. However, all hosts need to protect themselves against personal liability claims and property damage caused by guests.
Let’s take a look at some insurers in the short-term rental space.
- Product 1: Pay per night. Cover for 1-90 days. Public liability of up to $10mill, Building up to $2mill, Contents up to $500k, Accidental or malicious damage, Theft, Loss of rent. Does not replace home and contents insurance (it is an add-on product).
- Product 2: Annual house insurance. Cover for 6 or 12 months. Public liability of up to $10mill, Building up to $2mill, Contents up to $500k, Accidental or malicious damage, Theft, Loss of rent. Does not replace home and contents insurance (excludes home owners use and natural disaster).
- Product 3: Annual apartment insurance. Cover for 6 or 12 months. Public liability of up to $10mill, Building up to $2mill, Contents up to $500k, Accidental or malicious damage, Theft, Loss of rent, Natural disaster, Glass breakage, Change of locks, Electric motor burnout.
- Product: Hostrite Apartment Insurance. From $255. Contents $30k-60k, Guest damage $50k, Loss of rent $50k, Public liability $20mill. Underwritten by Lloyd’s of London.
- Eligibility: Building must be covered under strata insurance, not your PPR, deadlocks on external doors, secure building entrance, lockable windows, landlords permission for sublet.
- Product: Holiday Rentals Insurance. Both owner occupier and holiday home in one policy.
- Building and Contents includes natural disaster, theft and burglary, malicious and accidental damage, fusion, public liability.
- Tenant Damage includes accidental and malicious damage, theft by tenant, loss of rent, public liability (short-term tenants and guests).
- Product: CHU Landlords Insurance for Strata (excludes common area). Specific to apartments, townhouses and units.
- Includes contents, loss of rent, malicious damage, liability for personal injury. Excludes tenants property and houses.
- Product: RentCover ShortTerm. Both contents and building.
- Guest damage – accidental or malicious $65k, Loss of rent $50k, Pet damage $65k, Legal liability $20mill, Tax audit $1k, Death of guest $50k, Water damage $65k, Fire damage $65k, Storm damage $65k.
*Disclaimer: Fivestarhost are independent Airbnb property managers and are not affiliated with any insurance providers. Please do your own research before deciding which insurance policy best suits your individual requirements.
What else can be done to protect my home and contents?
Deter theft by applying security measures such as tying down expensive appliances or wall-mounting televisions. If you have electronic key entry, change your entry code after each guest. Install cameras to your front and rear entry doors (and make sure to disclose these cameras in your Airbnb listing, so your guests are informed).
A further note about cameras, it is never ok to install these to the inside of the home. It is a breach of privacy and completely unethical. Cameras should only be used as evidence of external property damage, confirm guest numbers and deter burglary – not to impose on your guests privacy.
Other than those few security measures, there is not much else you can do to protect your property from normal wear and tear. Your furniture, bedding and appliances will get stains and scratches on them and if the damage doesn’t affect the functionality of the item, you cannot make an insurance claim. If you rent your property full-time, this kind of thing is better claimed as a depreciation deduction in your tax return.
Fivestarhost provide professional co-hosting services to help look after your Airbnb property. A professional co-host can deter party-goers and attend noise complaints to keep property damage to a minimum. We can complete an incident report for any liability claims. We will also notify you of any damage at guest check-out, to ensure your Airbnb insurance claim is successful. Contact us today for a free consultation.