Short term rental insurance: why you need it for your Airbnb

Chances are you’re thinking about insurance, because you’re reading this article. But did you know that short term rental insurance is not available in standard landlord insurance policies? This leaves you wide open to risk of financial loss from either property damage or being sued by an injured guest.

Imagine this scenario. You have listed your property on Airbnb, ready to earn some serious income while you’re away on holidays. You have spent the past month organising furniture, photography, toiletries and cleaning services. The property looks amazing and now you are ready for your first guest.

Everything goes smoothly and the guest checks out as planned. You couldn’t be more pleased with the process. That is, until your cleaner calls to you inform you the property is on fire, but don’t worry – the fire brigade are putting out the flames as you speak. It turns out the gas was left on and a tea towel caught fire after the guests left. Thankfully no one was hurt, but this could have been a far worse situation.

Something like this happens every day in the world of Airbnb hosting. Whether it is a small house fire, a broken lock, laundry flood, drug den or murder scene – the range of property damage varies with each circumstance and accidents can happen at any time.

A survey by insurer IAG showed that 54% of Australian Airbnb hosts are unaware of how their home-share activities are covered by their insurers. Which means home owners leave it to Airbnb to decide whether to remedy property damage caused by guests.

Even worse, home-sharing will void your public liability cover under standard home and contents policies. This means you will be liable for all legal costs incurred in a personal injury claim, unless you have the right insurance.

Why standard property insurance policies don’t cover home-sharing

Home and contents insurance is specifically tailored to home owners who reside in their own home and extends to their visiting guests. It does not include guests using your home as travel accommodation.

Insurance providers will cancel your policy if they find out you are renting short term through an online platform like Airbnb or Booking.com, simply because their insurance cover is not catered to the short term rental market.

Most insurers regard short term home-sharing as ‘commercial or business use’ with a higher risk of making a claim. So, if they do offer insurance for home-sharing, it will be more costly than traditional landlord insurance.

What protection do short term rental platforms offer

Several platforms offer hosts some insurance protection, including Airbnb, VRBO and Booking.com. Hosts that want to list their home on multiple platforms, will need to make sure they are covered independently of listing platforms, for peace of mind.

Airbnb offers hosts two types of insurance cover called AirCover: Host Liability Insurance and Host Damage Protection. Host Liability Insurance provides hosts with up to $1 million USD in third party liability cover to protect the host if a guest is injured or their property is damaged during their stay. Host Damage Protection provides up to $3 million USD for property damage to the hosts property or possessions.

VRBO and Booking.com offers something similar to Airbnb Host Protection, called ‘Liability Insurance’. This covers third party claims for property damage and injury up to $1 million USD. However, it doesn’t cover damage caused by guests to your property.

Due to the many exclusions and limitations of platform insurance products, more comprehensive cover is gained from having backup insurance from a trusted insurance provider, with policies specifically for short term rentals.

Where can you get short term rental insurance in Australia

Short term renting on platforms like Airbnb and Booking.com has grown significantly in Australia, so it makes sense that more insurance companies are expanding their product offering.

Let’s take a look at some major players,

Sharecover

https://sharecover.com/products/short-stay-hosts

Product 1: Pay per night

Details: Cover for 1-90 days. Public liability of up to $10mill, Building up to $2mill, Contents up to $500k, Accidental or malicious damage, Theft, Loss of rent.

*Does not replace home and contents insurance (it is an add-on product).

Product 2: 6 or 12 month

Details: Cover for 6 or 12 months. Public liability of up to $10mill, Building up to $2mill, Contents up to $500k, Accidental or malicious damage, Theft, Loss of rent.

*Does not replace home and contents insurance (excludes home owners use and natural disaster). Underwritten by NRMA.

Eligibility: Property must be habitable, written consent obtained for sub-letting, council approval for short-term use, platform must have guest verification checks, property must be maintained in a good state of repair.

Ceneta

https://www.hostriteinsurance.com.au/

Product: Hostrite Airbnb and Short Stay Insurance

Details: Contents $30k-60k, Guest damage $50k, Loss of rent $50k, Public liability $20mill. Underwritten by Lloyd’s of London.

Eligibility: Building must be covered under strata insurance, not your PPR, deadlocks on external doors, secure building entrance, lockable windows, landlord’s permission for sublet.

RentCover

www.rentcover.com.au/Insurance/Short-term

Product: RentCover Short-Term. Option to cover building and contents

Details: Guest damage (accidental or malicious) $70k, Loss of rent $50k, Pet damage $70k, Legal liability $20mill, Tax audit $1k, Death of guest $50k, Water damage $70k, Fire damage $70k, Natural disasters $70k.

Eligibility: Under 10 acres of land, no pre-existing damage to the building.

Terri Scheer

https://www.terrischeer.com.au/holiday-rental-insurance/

Product: Holiday Rental Insurance

Details: Loss of rent up to $50k, contents and building up to $60k, legal liability $20 million.

Eligibility: Land must be less than 8,000 m2. Home owners can get either a short stay policy (managed by a property manager) or a self-managed policy.

Disclaimer: AirTrip are independent short term rental property managers and are not affiliated with any insurance providers. Please do your own research before deciding which insurance policy best suits your individual requirements.

AirTrip offer assistance for home owners when choosing the right insurance cover. As there are many different providers who offer a variety of cover, we help our clients choose the best insurance according to their circumstances and property type.

As part of our management service, we follow up claims with online platforms in a timely manner. We complete incident reports for any liability claims and provide photographic and/or video evidence to assist with a successful insurance claim.