As a property owner, you might consider putting your home up as a short-term rental on a site like Airbnb. But did you know that your regular homeowners insurance probably isn’t sufficient?
Before you rent out your property, you’ll need to review the homeowners insurance to determine what exactly is covered. Then, consider what add-ons and endorsements you might need.
If you’re looking for a new landlord insurance policy, our partner Obie offers a simple and intuitive platform that gets you the right coverage at the right price. Whether you’re new to property investment or looking to expand, you can get a personalized insurance quote in minutes.
What are the Most Common Problems Airbnb Hosts Experience?
When you open your home to strangers, you hope that they show your property the same respect you do- but there are always risks to worry about. These “Airbnb risks” include:
- Vandalism – whether the result of an unauthorized party or the actions of an individual guest, your property might be intentionally damaged.
- Theft – from a deck of playing cards to more valuable items like TVs and artwork, thefts can and do occur.
- Unpaid property rental – while Airbnb offers safeguards, a guest may fail to show up or simply refuses to pay rent.
- Bodily injury – injury to a guest staying on your property can be a serious problem, and you should protect yourself from any potential liability.
- Damage to your property – whether intentional or accidental, you want to ensure that your home is protected against potential rental damage.
- Damage to your guests’ property – if your guest’s property is damaged while staying in your rental unit, you want to ensure that your insurance will cover any claims made against you.
It’s important to consider these risks when thinking about renting out your home. There are countless horror stories about guests who leave mystery stains on carpets and walls, of TVs and artwork being stolen, and parties getting out of control.
If you own a property for the sole purpose of renting out to others on a short-term basis, you could also encounter unexpected damages if the space is left vacant for a long period of time.
Mold, broken pipes, sewer backup and damage caused by faulty appliances are just some of the things that might go wrong when you’re not around.
Ensuring that your property has the right type of insurance is critical as it helps mitigate the expenses associated with repairing and replacing damaged property.
What Insurance Do You Need for My Airbnb?
When you post your short-term rental on Airbnb, you receive their Host liability coverage automatically. This coverage includes:
- $1 million USD liability insurance to a maximum number of claims per host property
- Legal liability coverage for incidents that occur during a guests stay that result in bodily injury or property damage to a guest or third party
This is great basic coverage, but there is a long list of exclusions in the coverage, and the claims process can be long and tedious as you have to go through Airbnb’s insurance provider instead of your own.
Some exclusions include:
- Electronic data
- Loss of or damage to certain property (specifically property you own, rent, or occupy or property loaned to you)
- Assault and battery
- Expected or intended injury
- Fungi or bacteria
Airbnb also offers its own Host Damage Protection. This provides:
- $1 million USD coverage in the event a guest damages your property during their stay.
As with host liability coverage, there is a long list of exclusions and the process of making a claim may be cumbersome.
Some exclusions include:
- Currency and other monetary possessions
- Animals
- Vehicles
- Any damage to property not on, in, or at Covered Accommodation
- Electronic data
If you’re looking to make your home available as a short-term rental, remember:
- You will need only homeowners insurance if your policy allows for short-term rentals, and you are only renting out for a limited time
- You will need an endorsement on your policy if you intend to rent out your property for a short period of time, usually not exceeding six months
- You will need landlord insurance if you are renting out your property for an extended period of time
- You will need business insurance if you will be using your short-term property as a regular income-generating endeavor
How Much Insurance do I Need for an Airbnb Rental Property?
It’s possible your homeowner’s insurance will cover you for short-term rentals, but the majority of policies do not. Some insurers will allow you to occasionally rent your property provided you inform them in advance, but usually, you’ll need to add an endorsement onto your existing policy.
Host protection insurance is essential if you’re home sharing. It’s important to know what types of insurance are available to you.
Homeowners Insurance Policy
- Insurance for the home that you live in
- Covers your dwelling (that is, the structure of your home), your personal property (your belongings on the property) and liability
- Often includes other structures protection for spaces such as sheds and garages
- Usually does not include home-sharing protection
- Often endorsements or add-ons are required if home-sharing, but this will typically only cover occasional renting for short periods of time
Short-term Rental Insurance (Airbnb Insurance)
- Insurance that covers your rental property when it is rented as an Airbnb or short-term rental
- Applicable to your primary residence or vacation property, usually for a maximum amount of time (generally six months)
- This is excess coverage to your homeowners policy that can help cover gaps in which the homeowners policy will not.
- It generally covers theft of your or your guests’ property, vandalism, loss of rental income and legal liability
Landlord Insurance
- Similar to business insurance
- Typically covers damage to your property, loss of rental income and third-party liability and property damage
- May not cover damage to tenant’s belongings and other property, which would need to be covered by their own tenant insurance policies.
- Generally applicable to businesses or individuals that rent property out for longer durations, not for home-sharing purposes
Like other insurance policies, the cost of Airbnb insurance depends on factors like:
- Where you live
- The type of residence
- The value of your property
- The value of your home’s contents
- What your deductible is
- How much insurance coverage you want
Typically, the general cost for Airbnb insurance coverage is between +/- $1000-$3000, but this is a very rough estimate.
For example, to insure a home in Brooklyn , Airbnb Insurance could cost between $4,000-$5,000/year. Meanwhile, a two-bedroom apartment in upstate New York could cost between $900-$1100 to insure. There are so many factors that affect the price, your best bet is to speak to an insurance provider to determine exactly what insurance coverage you will need.
When looking at how much Airbnb insurance you need, consider the following:
- What property damage coverage do you require – the rebuilding costs of your residence, not including the land
- Value of items in your home – total up the replacement value of your possessions
- What liability coverage you need – what costs you’ll face should an individual be injured on your property
TIP: Itemize any possessions in the home and their value. This will help you if you ever need to make an insurance claim.
Be sure to compare quotes when looking for Airbnb insurance. Many companies offer bundling options if you have multiple policies with them, but you might be able to find a more affordable rate with another company.
Proper expense management is critical when running an Airbnb. Knowing how much you’re spending on home insurance, Airbnb insurance and other expenses helps ensure your rental is turning a profit. We offer integrated, intuitive expense management with
our platform, to help make turning a profit easier.
Why Do You Need a Specialized Insurance Policy for Your Airbnb Property?
An insurance policy for your Airbnb property is necessary for many reasons. These include protecting your financial interests, ensuring guest safety, and meeting legal requirements.
The following are some reasons you may need a specialized insurance policy for your Airbnb:
- Protection for your investment: Financial protection should be a top priority for any insurance provider. Specialized insurance products can protect you from potential financial losses in the event of property damage, theft, or accidents during a guest’s stay. It can also cover repair or replacement costs, providing peace of mind and preventing huge out-of-pocket expenses.
- Liability coverage: Hosting guests comes with the risk of accidents and injuries occurring on your property. A well-defined Airbnb rental insurance policy offers liability coverage, protecting you from legal and medical expenses if a guest gets injured or suffers damages due to your property’s condition or negligence.
- Compliance with Airbnb’s Host Guarantee: Airbnb provides some protection through its Host Guarantee and Host Protection Insurance programs. These coverages may need to be more comprehensive for your specific situation. Having a well-rounded insurance policy ensures that you have adequate coverage tailored to your property and hosting activities.
- Meeting local regulations and requirements: Some jurisdictions require short-term rental hosts to have specific insurance coverages or permits to operate legally. A good insurance policy helps you comply with these regulations and avoid potential fines or legal issues.
- Protection of your assets: For example, if you are renting out a property which is your primary residence, having a separate insurance policy for your Airbnb can help protect your assets in case of a liability claim or lawsuit.
- Business interruption coverage: An insurance policy may include business interruption coverage, which can help you recover lost income if your property becomes uninhabitable due to a covered loss, such as a fire or natural disaster. This can be essential for maintaining financial stability while repairs are being made.
- Enhancing your guest trust and confidence: A great insurance policy demonstrates to guests that you are a responsible and professional host. This can help build trust and confidence, potentially leading to more bookings and positive reviews.
A proper insurance policy for your Airbnb is critical as it can protect your financial interests, ensure guest safety, and comply with local regulations. It’s essential to research and choose a policy that best fits your specific needs, considering the type of property, location, and level of coverage required.
Insurance Company Considerations for Airbnb Property
When choosing an insurance provider for your Airbnb property, it’s important to consider several factors to ensure you select the right company and insurance policy.
The following are some key points to remember while researching and comparing insurance companies:
- Coverage Options: Insurance providers may offer varying coverage options and levels. It is important to thoroughly understand each company’s specific coverage, which could include property damage, liability, business interruption, and additional living expenses. So, choose a company that offers coverage tailored to your Airbnb property and hosting activities.
- Specialization in Short-term Rentals: There are some insurance companies that specialize in short-term rental insurance and deeply understand the risks and challenges of hosting guests. These insurers can offer customized policies for Airbnb hosts and provide more comprehensive protection than standard homeowners or landlord policies.
- Rates and Deductibles: Make sure to compare premium rates and deductibles across multiple insurance providers. Then, look for a company that offers competitive rates while still providing adequate coverage. Remember that the cheapest option may not always be the best, as it could result in insufficient protection.
- Financial Stability: Choose an insurance company with a strong financial background and good credit rating. This ensures the company has the financial resources to pay claims for a covered loss.
- Customer Service: Research each company’s reputation for customer service and handling. Look for a provider that is known for prompt and fair claims processing, as well as excellent customer support. Read the reviews and ask for recommendations from other Airbnb hosts to gauge their experiences with the insurer.
- Policy Flexibility: Choose an insurance provider that offers flexible policy terms and conditions. This might include adjusting coverage levels or adding additional coverage as needed and options for short-term or seasonal policies if you only rent out your property during specific periods.
- Discounts and Bundling options: Some insurance companies offer great discounts for bundling multiple policies, such as home, auto, and short-term rental insurance. So, look for opportunities to save money on your insurance premiums by taking advantage of these discounts and bundling options.
By carefully considering these factors, you can make the right decision when selecting an insurer for your Airbnb property. This can ensure that you have good coverage and protection for your hosting activities, thereby safeguarding your financial interests and providing peace of mind for you and your guests.
Which Companies Offer Insurance for Airbnbs?
More and more companies are offering short-term rental insurance for Airbnb hosts. It’s always a good idea to speak to your current provider to see if they offer any endorsements. However, if you’re looking at getting a new policy or are thinking of switching companies, here are some providers that offer short-term rental insurance:
Obie
- Seamless integration with Baselane’s platform designed for rental property management
- Tech-enabled to provide industry-best rates that are right for each unique property
- Customizable coverage to meet your unique needs
- Fast and easy online platform that allows you to request a quote in under 5 minutes
Proper Insurance
- The benchmark in Airbnb insurance
- Costs slightly more upfront, but provides good all-in-one coverage
- Policy is underwritten by Lloyd’s of London
- Offers protections from Airbnb theft, liability issues and property damage
- Easy to use online service plus friendly and knowledgeable staff
Liberty Mutual
- Offers a landlord insurance policies that can cover your property, liability that occurs on your property and loss of rental income
- The coverage is not intended to insure a space where you reside, but rather a secondary residence you own for the purpose of generating income
- If you are renting out a room or a space in your primary residence, then an alternate Airbnb insurance policy might be right for you
Allstate
- HostAdvantage Home-Sharing insurance that can be added on as an endorsement to your home policy
- Coverage in the event your personal belongings are stolen while you are renting your home and in the event of damage to your personal property
Erie Insurance
- Home Sharing Coverage is an endorsement that provides property damage, theft and liability claims coverage
- Only available for an individual’s primary residence
- Offers business insurance policies that are more suitable if one is looking to operate a secondary income property
Farmers Insurance
- The landlord insurance policies can provide more a-la-carte options for individuals who rent out a secondary property
- Includes landlord liability, property damage, named-peril, loss of rental income, personal property and personal injury
- Offers Other Structures endorsement, which extends your home coverage to garages, driveways, sheds and other detached spaces associated with your home
What Information Do I Need to Get an Airbnb Insurance Quote?
All the things you need to consider to get a quote:
- Address
- Age of building
- # of units
- Square footage
- Build construction type
- Major renovations dates
- Monthly income (actual or estimate)
- Market value of property
- Age of systems (electrical, plumbing, HVAC, roof, etc.)
How to Get a Quote for Airbnb Insurance in Minutes?
Watch this Video About How To Get an Airbnb Insurance Quote:
How Can You Make Sure My Airbnb is Turning a Profit?
Hosting a property for Airbnb rentals is a business. You want to ensure that you’re turning a profit and not losing money.
Ensuring that you have proper expense tracking and have access to quality analytics allows you to manage your home sharing business with confidence. With our integrated finance management service, you gain full control of your cash flow. Easily tracking your revenue and expenses means you can identify just where your money is going, allowing you to identify cash saving areas.
Our advanced property metrics provide you with valuable insights into what the return on your investment is. With real-time analytics, you can track how your short-term rental property is performing as an investment by easily identifying your ROE, net cash flow, and cash-on-cash return. Try out our easy-to-use analytics tool for landlords.
- Make sure you have the right coverage
- Check if you can save $100's on existing policy
- No phone call or hassle required
FAQs
Generally, your homeowner’s insurance will not cover your Airbnb rental property. You will most likely require a separate insurance policy or endorsements on your homeowner’s policy, depending on whether you reside in the property or not.
If you’re renting a room on Airbnb, it’s a good idea to speak with your home insurance provider to determine if you require additional endorsements. Some providers allow for occasional renting of rooms – or even your entire property, but most likely you will need an add-on or endorsement to your policy.
Airbnb offers Host Liability insurance and Host Damage Protection. Host liability coverage protects your guests in the event of personal injury or damage to their property while on your premises. Host damage protection covers your property and possessions in the event they’re damaged by a guest. These policies are included for Airbnb hosts, but purchasing additional coverage is recommended as the claim process can be long and complicated, and there’s an extensive list of exclusions.
