Insurance - Home used for BOTH Private and Airbnb Rental

[Justin166]

Hello fellow hosts

Really interested to see what people are doing now regards Insurance, given the level of cover now provided by Airbnb for risks seems to have significantly improved regards liability, damage and now even pet protection. 

Our property is a little different in that we are owner occupied on the ground level and rent out the upper level to guests, so it’s interesting whether standard home insurance, or landlords insurance, is more appropriate. 

Question? 

when the concept of Airbnb style use of private homes took off there was a concept raised that standard home insurance would be fully voided if a person simply rented out even just a bedroom or two for a couple of weeks. 

The concept was that the home would then become effectively “a lodging house“ and potentially void the entire home insurance policy. 

Do hosts feel this is true? -Or perhaps an exaggeration? 

-is it more so simply a case that standard home insurance would not be voided but you would not have the additional protection regards tenant or malicious damage provided under a landlord‘s policy.

I’m looking to revert back to just standard home insurance, with full disclosure to the insurer of the part-time use of the home also for Airbnb style rentals. 

Then rely on the various protections provided by Airbnb for guest liabilities/damage. 

Thanks in advance and happy hosting!

[Lorna170]

@Justin166   I do not recommend that you change your insurance.  I would maintain homeowners on the portion that you occupy and renters on what you rent out.  However, you should have a conversation with your broker before you make your decision.

There are many discussions on this forum about hosts who have not been reimbursed, covered, or otherwise assisted by AirBnB's insurance plan.  Until I have an actual policy from AirBnB's insurance company with my name and property on it, I don't believe that Air's coverage exists.

If you have an issue, and you make a big enough stink about it that it is reported in social media, or you get a sympathetic CS rep, then you may actually be reimbursed.

[Justin166]

@Lorna170  very much for your insights, I really wasn’t aware of how uncertain the cover was Airbnb provides, they certainly seem to promote it heavily!

given the split use of the home both as personal residence and short-term rental on the different levels…. it is very hard to find appropriate insurance

certainly not possible to take out two different policies to cover the two different uses

seems we fall into a unusual market niche! 

[Helen3]

I think any host that doesn't take out STR home insurance to cover their STR business is quite frankly a little mad. Why would you put likely one of your most valuable assets at risk ? @Justin166 

Airbnb's guarantee is not insurance and shouldn't be considered as such it has many exclusions. 

Many home insurance policies will be automatically invalidated if you use your home for commercial use.

Not worth the risk. Make sure you are properly insured. 

[Justin166]

Thanks Helen, really appreciate your insights. @Helen3 

-given the home is both for personal use downstairs and Airbnb upstairs we have checked that we can now get normal home insurance that will not be voided as long as we fully disclose this partial use of Airbnb. 
…..yes this is a new development in Insurance. 

however it would not cover damage or theft by rental guests so we would then have to rely on the Airbnb theoretical protection which of course seems very grey! Thanks again

[Sarah977]

@Helen3  "I think any host that doesn't take out STR home insurance to cover their STR business is quite frankly a little mad."

Well, I don't consider myself mad, but there are all sorts of different situations depending what the listing is and where it is.

I have zero house insurance at all. My house is solid concrete construction-it can't catch fire and it can't blow away in a hurrricane. The worst that would happen is that some windows might blow out in a hurricane, or the roof tiles blow off. Repairing those things here in Mexico would cost less than the insurance deductible. 

If it sustained damage in an earthquake, it still would cost less than what I would have spent on insurance since I built the place 14 years ago.

As far as guests and str insurance, there is no reason I can think of that I would need it. I don't get the kind of guests who steal or destroy things in my home share, and if they tripped on the stairs and broke their ankle, good luck trying to sue me here in Mexico- it isn't a litiginous society and it takes years for anything to work its way through the court system here. Plus a Mexican judge would say, "So you tripped and broke your ankle on perfectly good stairs- how is that the host's fault?"

So in my case, it would be a bit mad to waste my money on insurance.

I certainly had homeowners insurance when I lived in Canada, though.

[Helen3]

I think from other host comments here you are definitely the exception @Sarah977 😁

[Debra300]

@Sarah977,

In addition to the very astute reasons you've provided, there are locations that don't even provide STR insurance, because of the bottlenecks in the legal system.  I have home owner's insurance for my guesthouse in St. Lucia, and when I inquired with my broker about coverage for the STR business, she said that there is no such coverage available on island.  When I asked what if someone gets hurt while on my property, she looked at me and said, "Well, hopefully they will have insurance if they are badly hurt.", with a facial expression that conveyed, "Too bad for them.  You know that it would take years for a case to go through court, AND they don't live on island?!":  https://www.theguardian.com/world/2022/jan/23/covid-danger-in-st-lucias-tiny-courts-puts-stop-to-tri....

I remember when I first moved into my home, and my neighbor's dog bit the LP gas delivery guy while he was in her driveway.  She nonchalantly walked outside, asked how he felt, gave him an alcohol pad and an adhesive bandage for the bleeding.  Then went back inside of her home, and I am sure she gave no further consideration to the matter.  He grumbled, and cursed in patois, but he got in his vehicle and went about his business.  I was astounded, because in the US, there would have been phones out taking pictures, anxiousness on the part of the home owner wondering if/the amount she will be sued, and the guy looking up the number of an ambulance chasing lawyer.

In Atlanta, my home owner's policy covers STRs as long as I also live in the place at least part of the time.

[John5097]

@Justin166

Proper and CBIZ are the two insurance providers for short term rentals (Airbnb) here in the US. You could check with them to see if they might offer policy in AU or find one that offers same coverage. I have Proper that does exactly what you are asking. It replaces homeowners insurance and fully covers the STR rental part as well, although the rental part has to be its own independent space with no shared space, such as bathroom, doorway, or laundry room, etc. It can be attached to the same house. Its a more comprehensive insurance designed for STR. 

Some host have complained its expensive.  

Other host have mentioned their homeowners including STR in parts of Europe, although my insurance agent said that no insurance company allows shared space short term rentals here in the US. Its worth mentioning because the risk is higher for a reason. I would worry less about something getting stolen or broken. As with any real insurance you decide the deductible and the rates adjust accordingly. In the past two years I haven't had any need for a claim. 

Back when I looked into it 2 years ago, the Airbnb insurance claimed it covered whatever the host primary insurance didn't, however this means that if primary insurance denied the claim, because STR isn't included, then the Airbnb insurance also wouldn't cover it. 

Again I haven't read the full policy for the new Aircover. A lot of people have complained there is no policy to review. I'm surprised they are allowed to get away with this, but also equally surprised that so many host just assume Aircover is a replacement or comprehensive insurance policy. It seems like it would be a nightmare on their end as some things will typically get broken or stained and not suited for rental property. Also any insurance will require some kind of documentation. 

Edit: My city requires licensed STR, proof of insurance, and additional million dollar commercial general liability which is include in the Proper policy. If someone gets injured rest assured its the property owner's responsibility to have necessary permitting, licensing, and insurance. 

 

 

[Mike-And-Jane0]

@John5097 the reason their is no Aircover policy to review is because the damage element of it is NOT an insurance policy and hence any payments are pretty much at the whim of Airbnb. The liability element is an insurance policy in those jurisdictions that allow Airbnb to offer it.

[John5097]

@Mike-And-Jane0As I said in my first post. 

"I have Proper that does exactly what you are asking. It replaces homeowners insurance and fully covers the STR rental part as well, although the rental part has to be its own independent space with no shared space, such as bathroom, doorway, or laundry room, etc. It can be attached to the same house. Its a more comprehensive insurance designed for STR."

Airbnb makes so many changes to their policies that I can't always keep up. They don't mail each of us a policy with our name on it, so I wouldn't consider it a replacement for anything, as they could change again without notice, and plan to keep my policy with Proper.