@Jay1435 Welcome to the Host Guarantee 'jungle'. Good luck with your claim. In actuality, as you already surmised...
The whole 'Host Guarantee' program is absurd, it defies logic on many levels. It is like a scam that everyone is 'pretending' its real, for different reasons.
1. Airbnb must have thought it was a grand idea originally because it made them look 'better' than its competitors at first, yet no other platform offers it to date.
2. Causes hosts to lower their guard because it gives them the false feeling it is a 'free' home insurance.
3. It is a nightmare to collect from. Must be the #1 reason of discontent between Airbnb & its hosts.
4. It may also give impetus eventually to cause host fees to rise, higher than the existing 3%.
5. It probably prevents a better system to ever replace it - like a true deposit system.
6. It also causes many listings that should not even be STRs (too high-risk) and even be on Airbnb; I.E. very expensive delicate homes or listings offering a super-low price/high-guest number combination (party favorites). Without the HG how many of these type of listings will dare offer STRs?
7. It is usually the source of awful bad anti-Airbnb press, the 'nightmare' sensational stories which the media relishes.
It must be economically worth it or it continues because of sheer stupidity, or a combination of both. The minute Airbnb becomes a true public company (meaning when shareholders will have a say) it will be dropped instantly.