Accommodation through the shared economy is a growing business – Airbnb listings in Australia topped 115,000 in 2017, while Stayz listings were reportedly around the 40,000 mark. As for temporary sharehouse accommodation, Flatmates.com.au apparently sees an introduction between room seekers and people leasing out space every two minutes.
In 2015, IAG’s consumer research showed 54% of Australian Airbnb hosts surveyed did not know whether their existing insurance would cover them hosting guests. If you’re not sure if you’re covered or not, there’s a good chance you may not be.
Insurance for hosts on Airbnb and Stayz
Insurance for short-term rental hosts is a specialised industry. There are a few specifically designed products currently on the market, including Airbnb’s Host Protection Insurance and Host Guarantee as well as ShareCover offered by IAG. Then there’s landlord insurance, which could provide broader cover than a standard short-term rental policy, but may sometimes only offer coverage for longer-term rental properties.
Airbnb Host Protection Insurance and Host Guarantee
Airbnb’s Host Protection Insurance program is provided in partnership with Lloyd’s of London and Zurich (and partners) to provide hosts with up to US$1 million of liability cover. It covers primary liability claims where a guest is physically injured or has their property damaged or stolen during their stay on your property. According to Airbnb, it may also cover damage to common areas outside of the listing itself. The insurance can be used even if the host has other insurances over the property. Airbnb states the Host Protection Insurance provides coverage for hosts and landlords (if the landlord is named in a lawsuit).
Airbnb’s Host Guarantee is said to protect hosts “against damages to their own possessions or unit in the rare instance of property damage by a guest,” up to US$1 million. It does have its own set of exclusions, including damage caused by pets, personal injury and property damage claims from third parties (which could instead fall under the Host Protection Insurance). Airbnb also states “jewellery, collectables and artwork can have more limited protections,” so these items may require additional insurance.
Airbnb Host Protection Insurance is currently available for more than one million Airbnb hosts who live in any of the following 26 countries:
- Czech Republic
- The Netherlands
- South Africa
- United Kingdom
- Japan (separate policy)
- New Zealand
- United States
Airbnb states the insurance does not cover your liability arising from anything in its list of excluded items, such as intentional acts to harm the guest, loss of earnings if your guest cancels or cuts short their stay, personal and advertising injury, harm to the guest caused by fungi or bacteria, communicable diseases, war (including acts of terrorism), product liability, pollution or asbestos, lead or silica.
ShareCover – IAG
ShareCover is an extra home and contents insurance product designed for people who list their house or a room on online accommodation sharing services such as Airbnb or Stayz. It is designed to cover short-term stays, so you only pay a premium for the nights that you have a guest staying.
ShareCover covers theft, damage, personal liability, identity theft and portable valuable contents for holiday rental properties.
According to IAG, ShareCover was launched in 2015 to fill “the protection gap” for hosts, with most standard home and contents insurance policies not covering damage or liability caused by a paying guest. However, it is important to note IAG’s warning that ShareCover may not necessarily be able to act as a “replacement” for a standard home and contents or landlord insurance policy.
Landlord insurance for Airbnb and Stayz
Landlord insurance typically covers the property owner for the entire year as opposed to a few days to a week, and some policies do not cover stays shorter than a few months. But there some landlord insurance policies that are specifically designed for short-term rental situations.
Most landlord insurance policies should cover your property for inclusions such as accidental damage, damage caused by storms and natural disasters, theft or malicious damage by a tenant (a paying guest), and public liability in case a tenant is injured on the property.
Importantly, landlord insurance also typically covers you for loss of rent – which is not covered by most short-term rental policies such as Airbnb Host Protection Insurance and ShareCover. This means that if for example your guest doesn’t pay you or you aren’t able to rent out the property while repairing damage caused by the tenant, your insurance company will cover you for the expected rent.
Why landlord insurance can be important for some?
Renting a part of or all of your home is not usually a scenario covered by ordinary home and contents insurance and can even void your policy in some cases, because it is considered a commercial use of the property rather than private use.
If homeowners aren’t covered, they can face expensive repairs of their property after a renter leaves. Even worse, they could face expensive public liability claims if a renter is injured while staying on their property – which could amount to hundreds of thousands of dollars.
If you aren’t sure about what’s covered under a policy you hold, contact your insurer and check your coverage.