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One crucial aspect that many hosts overlook is obtaining suitable short-term rental insurance.
The short answer is a resounding yes – if you're involved in short-term rentals, it's imperative to ensure you have the right insurance coverage.
Whether you're renting out a single room or an entire house, you are essentially acting as a landlord, and protecting your property with a reliable and adequate insurance policy is essential.
You might wonder, "Won't my existing insurance policy cover it?" The answer is typically no. Until recently, many insurance companies didn’t really have systems in place for Short Term Rentals so there was a lot of conflicting – and often incorrect – information floating around. Generally speaking traditional insurance policies typically exclude coverage for damages, theft, or liability issues that occur while your property is being used for business or revenue-generating purposes, which is the case in short-term rentals.
ADVISE YOUR BUILDING + CONTENTS INSURER
It's essential to inform your current building and contents insurer that you are operating a short-term rental and inquire if they provide coverage for this activity. Failing to do so might leave you vulnerable to significant financial losses, especially in the event of a personal liability claim.
WHAT IS AIRBNB'S COVER?
While platforms like Airbnb offer some form of insurance, it's crucial to understand its limitations. Airbnb's "AirCover" includes coverage such as $1M USD Host liability insurance, $1M USD Experiences liability insurance, and $1M USD Host damage protection, with additional coverage for pet damage and deep cleaning. For guests, Airbnb's insurance protects against booking costs if the property is misrepresented by the host or if there are issues during check-in.
LIMITATION TO AIRBNB + THIRD PARTY INSURANCE
However, there are essential distinctions between Airbnb's coverage and dedicated short-term rental insurance. One significant difference is the way they handle reimbursements. With short-term rental insurance, in the event of damage to your property, you can generally expect a replacement with an equivalent new item. For example, if your fridge gets damaged, the insurance will provide you with a new fridge of similar value. On the other hand, Airbnb's AirCover considers the age of the item and compensates accordingly, which may not be enough to cover the full cost of replacement.
Moreover, if Airbnb decides not to cover a particular claim, you could find yourself facing a lawsuit with potential liability.
In contrast, having your own short term rental insurance ensures you have dedicated protection, minimising your exposure to risks and uncertainties.
RISKS OF EXPOSURE WITH DIRECT BOOKINGS
It's worth noting that platforms like Stayz and Booking.com currently do provide insurance coverage for hosts or guests. However, if you receive a direct booking outside of these three platforms or from a third party platform that does not provide cover then you are leaving yourself exposed. In these instances it becomes even more critical to have your own insurance in place.
Considering the potential consequences of being left uninsured in the event of an unforeseen incident, the investment in short-term rental insurance is undoubtedly worth the peace of mind it provides.
Protecting both yourself from potential liabilities and financial losses as well as your guests is a responsible approach to being a host on these platforms.
Please consult a qualified insurance representation to decide on the best policy for you and your property.
