Landlording & Rental Properties

Here’s Why You Need Insurance for Your Airbnb

Expertise: Landlording & Rental Properties, Real Estate News & Commentary, Real Estate Investing Basics
42 Articles Written
Hand with house key in foreground, living room with light wood floors, white couch and white shelves in background

A lot of our clients want to know if the Airbnb host-guarantee and host-protection policies (available for you to read through on the Airbnb website) provide sufficient protection if accidents happens while they are away. The answer is no, they do not. We highly recommend protecting yourself with additional coverage.

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Why You Need Your Own Insurance

First off, Airbnb has dual loyalty. The business cannot survive without hosts, and it cannot survive without guests. It needs to make both parties happy, which may or may not affect your ability to successfully process a claim.

Second of all, the host guarantee is designed to protect against rare instances of damage and does not cover “normal wear and tear.” And because “normal wear and tear” can be interpreted in a number of ways, this makes me nervous.

Related: The Top 10 Dos and Don’ts for Airbnb Short-Stay Landlords

That said, there are three key ways to protect yourself:

  1. Screen your guests
  2. Utilize the security deposit feature
  3. Use a short-term insurance product that specializes in these types of stays

Notice that I didn’t mention rely on your homeowner’s insurance? That’s because a lot of standard homeowner’s insurance policies don’t cover Airbnb, and some will even ask you to stop if they catch wind that you’re renting your space.

Related: My Client Has Tripled His Income With Airbnb: Here’s What He Should Know About Taxes

Screening Your Guests

When screening guests, the obvious place to start is reviews. Do they have them? Are they good? Are they specific? What’s your gut telling you?

Airbnb allows for you to take a security deposit. Here are a couple things to note:

  • The Airbnb security deposit has to be added before the reservation is booked
  • A claim has to be made within 14 days of the checkout date (or before a new guest checks in—whichever is earlier
  • Airbnb will mediate and collect from the guest if necessary

As with insurance, there may be mixed loyalties here and an extra level of bureaucracy that could prove to be a headache.

Getting Insurance

There are insurance products that will provide added protection for your stays. You can get an insurance policy that covers you on a day-to-day basis or one that acts as both a homeowner’s policy and a short-term rental policy. I’m not listing their names here because this isn’t a marketplace, but you can Google them and read about the different products.

The key here is to be clear about what you need, and make sure you’re covered in appropriate circumstances.

On a final note, don’t let the news scare you. With the volume of business that Airbnb does, of course there’s potential for accidents. But accidents are rare, and the majority of hosts and guests are good people.

Barring any major catastrophe, the money you make from Airbnb will be more than enough to cover a piece of broken furniture.

Have you experienced any accidents with a short-term rental?

How did you protect yourself?

Erin Spradlin co-owns James Carlson Real Estate. She loves working with first-time home buyers or sellers because it is fun to help people realize their dreams and loves working with investors because she's a fellow spreadsheet nerd. In addition to working with clients on buying and selling real estate, Erin Spradlin also runs Denver Women Invest, a monthly female investing group (email her if you want in!) and educational classes on Airbnb investing and buying or selling your first home. In keeping with many successful real estate investors, James Carlson Real Estate believes strongly in giving back to the community. For that reason, Erin and James donate a portion of their commission to a charity of their client's choosing on every single transaction.

    Kevin Lefeuvre from Los Angeles, California
    Replied about 2 years ago
    Anas B. Investor from Fairfax, VA
    Replied about 2 years ago
    Does anyone have experience in the price range of insurance premiums for policies covering Airbnb short-term rentals?
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied about 2 years ago
    I believe my brother is paying $1050/month on a three bedroom in Colo Spgs. I know of other products that do nightly rates and estimate it’s about $7/night but you only pay for the nights you have guests.
    Tim Wade Real Estate Broker from Mcminnville, OR
    Replied about 2 years ago
    Do you really mean $1k/month? $7/night is more like $200 if you’re fully booked. Perhaps you meant your brother pays about 150 and an extra 0 found its way in there.
    Anas B. Investor from Fairfax, VA
    Replied about 2 years ago
    Yes, $1k does sound excessive.
    Erin Spradlin Real Estate Agent from Denver, CO
    Replied about 2 years ago
    Yeah, that should say $1050/year instead of month. For policies that cover both homeowner’s and the short-term, it’s usually about time and a half what you normally pay for just homeowners.
    Jason Allen Investor from Atlanta, GA
    Replied 7 months ago
    Great post! I always recommend that people get some type of third party insurance on top of the $1,000,000 policy that Airbnb gives hosts. It is expensive but if you shop around you can find some good deals. I’ll say though that if you’re just doing this with one house or it’s just a hobby then it may not be needed. But if you have 3+ properties and your plan is to scale you may want to look into third party insurance just for added protection. Also business structure is extremely important. You must set up some kind of legal entity to give yourself added liability protection. The LLC is a great option for Airbnb business owners.
    Ben Fraser Investor from Lansing, MI
    Replied 3 months ago
    I've got a friend who is going through the AirBnB claims process right now. He is not a happy camper, to say the least. Based on his experience, and this article, I'm going to tell him to get additional insurance. Thanks!