Renters Insurance, Airbnb And Other Home-Sharing Services

Airbnb and other home-sharing services, such as the HomeAway family of websites, have grown tremendously in recent years -– hosting temporary guests can be a good source of revenue. But it is not without risk. Renters thinking of using home-sharing services should consider the insurance ramifications before hosting guests.  

Tenants need to review the terms of their renters insurance policy, what insurance home-sharing services include, liabilities they face as a host, and other things detailed below.

Does Renters Insurance Cover Airbnb and Other Home-Share Guests?

Yes. Renters insurance policies generally cover damages caused by temporary guests to a rental unit and will protect the renter if a legal guest files a lawsuit against them. Depending on how often a home is temporarily leased, it might even cover damages caused by guests to a renters personal property. Here are a number of caveats that renters need to consider:

First, renters need to review the terms of their residential lease agreement. Some leases explicitly state that renters are not permitted to temporarily lease their rental unit to others. The money a renter might be able to make temporarily leasing their home is probably not worth the risk of breaking the terms of a lease and a potential eviction. Secondly, renters need to be aware of any local laws regarding home sharing, even if most are loosely enforced. Allowing an Airbnb guest stay in your apartment when it's not allowed on your lease, or it's prohibited in your city, that's grounds for a renters insurance company to potentially deny your claim. 

Occasional Hosting vs. Commercial Activity

Renters (and homeowners) insurance policies generally cover damages and personal liability of hosting temporary guests through home-sharing services, such as Airbnb, as long as a policyholder hosts them “occasionally.” Most companies define occasional hosting as accommodating temporary guests 90 or fewer days per year. Hosting temporary guests more than 90 days per year generally qualifies as commercial activity, which is excluded from standard renters insurance policies. 

Renters facing an exclusion because their home-sharing qualifies as commercial activity are potentially leaving themselves vulnerable to financial loss. For example, say a temporary guest injures his or herself in an tenant’s home and files a lawsuit against them. The tenant would have to pay out of pocket for legal fees to defend against the lawsuit, and for any damages they might be ordered to pay, if their coverage was negated.

What qualifies as occasional hosting and commercial activity might also differ between cities, counties and states, so renters need to be mindful of how local law define those terms. Remember, being unaware of local laws does not exclude offenders and should be taken into consideration, no matter how likely or unlikely a criminal charge might be. 

Do Home-Sharing Services Have Insurance for Hosts?

Yes. Following a number of lawsuits, most home-sharing services began offering insurance policies that cover hosts and guests, at no additional charge. Some policies even act as the primary coverage for hosts and landlords, such as Airbnb’s Host Protection Insurance. There is overlap between what a typical renters insurance policy covers and what Airbnb's insurance provides, and key differences too.  

Be aware that insurance coverage offered by a company might differ between countries, states, or municipalities. Airbnb's Host Protection Insurance, for example, is not available in all of the countries where the service is available and the coverage in the U.S. differs between states.

For example, if a guest slips and falls in a temporary rental and files a lawsuit against the host, Airbnb's Host Protection Insurance would likely cover that claim before a renters policy. Host Protection Insurance acts as the primary insurance coverage, meaning it covers qualifying losses before other insurance polcies in place will, such as renters insurance. 

Host Protection Insurance might act as the primary coverage but it does not cover the personal property belonging to the host. If a guest damages a host's personal property, renters insurance would become the primary coverage in that circumstance and might cover those losses. 

Renters Insurance Endorsements that Cover Home-Sharing

Renters insurance companies in the U.S. have taken steps to better define what frequency of short-term home-sharing qualifies as commercial activity, but there is currently no insurance designed specifically to cover that activity. However, there is an optional endorsement on the way that some renters will be able to purchase and bolster their coverage with. Any renter who hosts guests through home-share services should consider this when shopping for a policy.

In the fall of 2016, Allstate will begin offering a renters insurance endorsement called HostAdvantage that will cover damages to a renter’s personal property damaged by a guest. Renters insurance might cover a policyholder's personal property damaged by a guest, but only if the renter hosts short-term guests occasionally. Those hosting guests at a frequency considered to be commercial activity would not cover a personal property claim, which is the coverage gap the Allstate endorsement would fill. 

Allstate’s HostAdvantage will initially be available in seven states: Arizona, Colorado, Illinois, Michigan, Tennessee and Utah. The endorsement is reportedly going to cost about $50 per year, keeping the cost of comprehensive renters insurance coverage reasonably low. The average annual renters insurance premium in the U.S. is $187

How Renters Can Reduce the Likelihood of a Claim

No matter how careful a guest might be or how foolproof a rental property is made, accidents can happen. But there are things a renter can do to mitigate the likelihood and severity of a claim against them.

Before temporarily renting their home to a guest, renters should make sure all security and safety devices are working properly. Check smoke and carbon monoxide detectors installed in a rental home. These devices are not required for a host to be eligible for a home-share service, but they are strongly recommended as a means to protect guests. 

Renter should also leave explicit instructions for temporary guests to follow in the event of an emergency. Create a safety card with this information neatly organized. It should include the location of a fire extinguisher, emergency phone numbers, and exit routes. Airbnb hosts can create a safety card online to display in their rental home and to show temporary guests they took the time to create one.

Adding a security deposit to a temporary rental listing and requiring verified identification also helps vet guests and might encourage more responsible ones to stay there. Limiting the number of guests permitted to the number a rental unit is intended to accommodate is another way to maintain a safe environment.

It’s a good idea to let neighbors know about temporary guests, too. They can keep an eye out for anything suspicious and might be willing to help guests if they have any questions.

Another way for a renter to mitigate damages to their unit or personal property is to only rent a room (or even just a couch) to temporary guests. Many tenants choose to temporarily rent their home only while they are away, but services don’t force them to list their home in its entirety.

The Sharing Economy vs Home-Share Programs for the Elderly

Short-term home-sharing or peer-to-peer services, which include companies such as Airbnb, are not the same as long-term home-sharing programs for the elderly or homeless.

Short-term guest services are designed for travelers and other individuals looking for a temporary place to stay and are charged for the time they spend there. Long-term home-sharing programs are designed to assist the elderly and homeless, who are frequently not charged for the time they spend in a home. In return, long-term home-share guests usually assist in housekeeping, cooking and other chores.  

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