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Why You Need Home Share Insurance

insurance

#1

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One of the questions we get asked most frequently by Airbnb Hosts is, “Doesn’t Airbnb already cover me?”

The simple answer is no. While Airbnb does offer protection, that protection is not a substitute for a Host’s own insurance.

Airbnb provides its Hosts with two protection programs: The Host Guarantee, which is meant to protect the Host’s property; and the Host Protection Insurance, which is designed to protect the Host’s liability.

This sounds great, but there are drawbacks to each of the plans. Let’s examine them in more detail.

Host Guarantee

The Host Guarantee is not insurance. It’s simply a promise by Airbnb to repair or replace any property damaged by a Guest during a stay. There are many conditions that must be followed in order to qualify for the protection, such as:

  1. The Host must attempt to settle the damage with the Guest, and that attempt must be done within the earlier of 14 days of check-out, or before the next Guest checks-in. That puts the Host in an adversarial position, causing anxiety and frustration - the exact opposite of the peace-of-mind provided by insurance. Plus, with back-to-back stays, this condition effectively precludes any coverage on the first stay.

  2. The Host must have complied with all of Airbnb’s Safety Guidelines.

  3. Airbnb must be notified of the damages within 14 days of check-out or before the next guest checks-in, whichever is earlier. This creates a very short reporting window.

  4. The Host must first try to collect damages from other sources, such as their homeowner’s insurance policy, any other type of insurance, or a security deposit.

  5. A detailed Proof of Loss form must be submitted within 30 days of incurring the damage, and it must be signed and sworn, and accompanied by an Airbnb Payment Request Form.

It’s important to point out that none of the conditions described above are required by property insurance.

There are another 17 conditions that Hosts must conform to in order to qualify for protection, including a “hold harmless” agreement in favour of Airbnb. We won’t waste time explaining that bit of legalese, but suffice to say it is not in the Host’s best interests.

Once qualifying for protection, the Host is subject to additional coverage conditions:

  1. Property is only covered for its “actual cash value”, which takes into consideration the depreciation of the damaged property. For example, a damaged TV that originally cost $1,200 would likely be worth only $200 once its a few years old. By contrast, an insurance policy will cover the “replacement cost” of the damaged property, which means the cost of buying a similar item new. So, the Host would collect about $1,300 for that three-year old TV.

  2. The limit of protection is only $1,000,000. That may sound like a lot, but what if a fire caused by the Guest destroys the home and all of its contents? What if the Guest has a wild party that trashes the entire home? At Slice, we’ve observed that over 50% of our customers carry insurance limits in excess of $1,000,000.

  3. Fine Arts are restricted to the point of effectively not being covered.

  4. Coverage for loss of income is restricted only to confirmed bookings lost as a result of covered damage to covered property, and of course only to bookings that were confirmed with Airbnb. An insurance policy will cover the Host for loss of both confirmed and potential bookings, and for bookings acquired from sources other than Airbnb.

In total, there are 29 limitations and exclusions, and 12 instances of excluded property - far more than most property insurance policies.

Host Protection Insurance

The purpose of the Host Protection Insurance is to provide primary liability insurance for Airbnb Hosts. This sounds good, and it’s certainly better than nothing, but we don’t recommend that Hosts rely on this insurance because of the restrictions and limitations to the program.

The limit of coverage is only $1,000,000 per occurrence and also carries a $1,000,000 maximum for the total of all claims at each listing location. This is insufficient in our opinion. By contrast, Slice provides $2,000,000 per occurrence with no maximum - and the limit is reset with every booking!

The policy is shared by all Hosts. On the surface, since the limit is $1,000,000 per occurrence, this doesn’t seem like a problem. However, the policy is most likely subject to a total maximum payout each year. With over 60 million Guests using Airbnb, there is potential that the limit of insurance could be used up by the time any one Host presents a claim.

Most importantly, the Host is not the “Named Insured” on the policy. The Host is only an “additional insured”. This means the Host does not own the policy and has no rights under the policy. The Host’s rights only extend as far as Airbnb is willing to allow. Claims must be submitted to Airbnb, and those claims will be managed and settled with Airbnb’s involvement. The only proper way to carry insurance is to be the Named Insured on one’s own policy, as that will ensure you are fully protected by the policy

Buy Your Own Insurance

The problems with Airbnb’s programs are not the fault of Airbnb. The insurance industry gave Airbnb no choice but to design its own protection, which is unfortunately inadequate.

Therefore, the only proper way for Hosts to protect themselves is to buy their own insurance policy, on which they are the Named Insured, and they are covered for their short term rental activities. One such option is Slice Insurance.

Slice provides on-demand, pay-per-use insurance to homeshare Hosts, so the Host never has to rely on Airbnb or any other homeshare company for protection. Our policy provides for replacement cost on property, protection against lost rental income, a $2,000,000 limit for liability and many specialty coverages designed specifically for homeshare Hosts, such as infestation coverage, all at an average cost of only $7 per day! Turn Slice on and off the same way that you do with your availability calendar. Slice was designed to work with hosts in a way that matches their life – only pay for when you are hosting while being fully protected, with the peace of mind that only true coverage provides.

To learn more or get started, visit www.slice.is/homeshare.

View this Slice blog post here.


#2

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#4

#5

I would not recommend Slice as a general solution.

The normal issue I see is that the primary Insurer has not been advised that short term rental is occurring in the Insured Property invalidating their cover.

Hosts need an annual cover that covers their business activities.


#6

@Como You should always notify your insurer about short term rental activities. Slice is meant to work in conjunction with your regular home insurance. Many insurance companies don’t offer short term rental insurance so this is meant to fill the gap so you have actual coverage for Airbnb while you’re hosting guests.


#7

I am not sure if this is what @como is asking…but if you notify your regular homeowner insurance company of a business activity…most have a clause that invalidates the policy if you are running a business. Typically a business exclusion clause.

So does Slice somehow work with the company to say that they are going to compensate, and the regular company says they will choose to ignore their clause to cancel even with business activity going on?


#8

@cabinhost

That would the obvious solution, Slice negotiates with ‘regular’ insurers so that if their customers buy Slice then they can still be covered by a regular Household policy.

Have not looked recently but that is not something they did do.


#9

@Como @cabinhost every insurer is different but generally, if you have specific coverage for Airbnb operations, the insurer will allow you to have Airbnb in your home and they will only cover the claims not related to Airbnb. If you don’t have specific Airbnb coverage, most companies will tell you they can’t continue to cover you due to the Airbnb operations.


#10

I have not heard of any Insurers who operates in such a way, I went and had a look on the Slice web site as I am sure they would wish to promote such Insurers as cooperating with their cover but could find no mention.


#11

Interesting. In the UK I used Admiral which acts as my home insurance, including covering short term lets, so I don’t need two products.

This works because I live in the property I let out, so I am not sure if they have a similar product to cover whole place listings.


#12

We have heard of hosts even asking if they would be covered For Air to be grounds for immediate cancellation. I suspect many are very hesitant to ask if they would be covered as long as they had slice.


#13

Always tricky when commenting on such things that apply globally, however generally Insurance includes two concepts that apply here:

Non disclosure of a material fact

Utmost good faith

If you conduct a business, STR, in your property and thing that forgetting to mention is somehow matters you could be in for a load of disappointment.

I assume that most people have some idea they are skating on thin ice and choose to ignore it.


#14

I certainly do. I don’t have any STR insurance and I haven’t disclosed my Airbnb to my company. If asked I wouldn’t lie though.

I’m here in the home, one story, no kitchen. I could go on with my rationalizations about why I don’t have it or need it but I know there is some risk. 400 guests and no problems needing insurance and ability to pay for certain repairs/replacements out of my pocket plays a role. If I had to come up with $2000 for a new bed I could. If my homeowners gets cancelled I have to look for another company or quit Airbnb. It’s ridiculous that having a roommate wouldn’t invalidate my homeowners but having Airbnb guests might.


#15

Think of it this way, would you expect a Hotel to be charged more or less than an Apartment block?

Anyway it does not really matter why, it is what it is. And I assume you are the norm, many would not find it economic to undertake STR’s otherwise.


#16

Be careful when making assumptions. My former homeowners insurance company made it clear that any business operation (other than a home office) on premises voided my property and liabilty insurance for any coverage, whether related to STR or completely unrelated, and initiated a non-renewal just because I asked if they had a commercial or supplemental insurance product they could sell me, because it “created uncertainty.” True story. Having STR coverage from Slice, Lloyds of London, or God wouldn’t have made any difference to them.


#17

So what was the final outcome? My apologies if you’ve answered this previously.


#18

Did some research and got coverage from Proper, but had to provide extra documentation on the separation between the main house and the attached STR unit. Also looked at some traditional B&B providers in my state in case I couldn’t get coverage from Proper.
I think your odds are good if you follow “don’t ask don’t tell,” so if your guest causes damage or is injured you would claim with Slice and if a tree falls on the roof you would claim with homeowners insurer, or even if you went naked on the STR coverage, because disasters are low probability.
The low probability but severe impact event If you went naked (and Air didn’t come through for you), i.e., you self-insure, would be a hideous injury with $ millions in medical costs, pain and suffering and lost income to your now permanently disabled guest. Their insurer (or their lawyer!) would demand your insurance info, homeowners denies and you are wiped out. My understanding is that insurers have access to databases of claims, and a court filing would of course be public, so you might have difficulty getting property insurance in future even if you financially recover.
Depends on your risk tolerance and how much angst you have entering into a contract (homeowners coverage that doesn’t allow commetcial operations) with the intent to not meet the contract terms.
Insurance industry is working on it but hasn’t quite caught up with home STR evolution.


#19

On a less Debbie Downer note, more insurance companies are providing riders or accepting supplemental STR insurance. I would just be careful to ask them about it in hypothtical terms.


#20

Does slice require you to claim with your homeowners first? If so, that would be like disclosing to them that you are doing an STR. And could result in cancellation of your main homeowners from that claim. Correct?


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