TL; DR – Even if someone properly sues you in Israel and is not required to go through mandatory arbitration, AirCover says it will defend the Host for certain claims arising during an Airbnb stay. But it’s concerning – and it tells you something (I’m not sure what but it isn’t good) – that you cannot get your own insurance. Get a local lawyer to advise you, and get that advice in writing if you go ahead with a pool in an STR. I wouldn’t build the pool; if already built, I would want to understand why no insurer would insure it and understand from a lawyer the limits of AirCover. If committed to offering an STR I’d consider burying the pool if already built.
If the claimant were the guest making the Airbnb reservation then that guest has presumably agreed to Airbnb’s terms of service, which requires mandatory arbitration
It appears to me that the insurance agent is saying that someone who has not agreed to Airbnb terms of service has therefore not agreed to the mandatory arbitration agreed to in Airbnb’s terms of service and could therefore sue the Host in Israel. I agree, but none of this post or anything on this forum is legal advice. The Host not such a guest will bring in Airbnb to defend the Host in a court of law, up to the policy limit of only $1,000,000.
Who is that ‘someone’? That could be someone the guest brought with them, as typically happens. [Of course, AirCover would not apply to a claimant where there is no Airbnb stay. So if a contractor fell in the pool or a neighborhood child trespassed and drowned in the pool, cases arising out of such incidents would not be covered by AirCover.]
Host Liability Insurance [HLI] under AirCover does say it “provides insurance that covers Hosts for their legal liability to a guest or third party for bodily injury or property damage due to an incident that occurs during a guest’s Airbnb Stay at the Host’s Accommodation.”
So if a Host were sued in Israel by a claimant not enrolled in Airbnb but during an Airbnb stay, and who therefore has not agreed to Airbnb’s terms of service, HLI still applies to protect the host. AirCover says “If the HLI program applies to the claim, the insurance includes coverage for claim investigation costs and expenses, as well as costs of defending a formal complaint such as a lawsuit.”
I’ll pause here because this reply responds to the specific objection the insurance agent made to you.
I’d like to know what you’ve been told on why you cannot get insurance for a short-term rental where you are in Israel.
Is your location within Israel an issue?
I assume that your location within Israel is a location approved for Airbnb accommodations. Is that right? Is there some controversy about your specific location?
I assume that your pool will follow all local building codes and any applicable local laws. Is that right? Do commercial codes apply?
You need a local lawyer to advise you and ideally commit the essence of that advice in writing. I understand you’re doing ‘leg work’ before you hire that lawyer, but in the end only a local lawyer, who is your lawyer, can advise you.
I agree with @Ritz3 that you cannot rely on what an Airbnb customer service representative says.
Your information is Airbnb’s summary of Host Liability Insurance. But you do not actually have the words of the policy, just the summary. And you, as well as most of us here, likely do not have the knowledge and skills to interpret that summary to the potential range of situations that could give rise to a liability not covered by AirCover. None of us knows you, your situation or all the questions to ask that would capture your situation and understanding.
For example, if you’re sued for $2,000,000 do you have the resources to hire your own lawyer? Are your assets protected in such an eventuality? Is your income? Can Airbnb settle its share with you for $1,000,000 and leave you to fend for yourself? If you’re sued in a situation that has nothing to do with the rental, do you have the resources to defend the lawsuit and how are your assets and income potentially affected?
We do know, from you, that you cannot get insurance from anyone else. That raises a big red flag.
Bottom Line: I wouldn’t rely solely on Airbnb as my source for STRs. I wouldn’t build the pool; if already built, I would want to understand why no insurer would insure it and understand from a lawyer the limits of AirCover. If committed to offering an STR I’d consider burying the pool if already built.