Understanding home insurance for an Airbnb

How does Airbnb work with homeowners insurance?

Your homeowners insurance generally does not fully cover losses connected to Airbnb hosting because short-term rentals are treated as commercial activity. Some insurers allow occasional rentals under a homeowners policy, while others require an endorsement or separate policy.

You’ll want to know whether your homeowners policy restricts coverage. Cynthia Heffernan, personal lines supervisor for The Dowd Agencies, says most homeowners insurance limits how often you can rent your residence.

"It is usually limited to six weeks a year. This can be problematic, especially for Airbnb hosts with properties on the coast or mountains where vacation rentals are common,” says Heffernan.

Heffernan notes that if you rent more than six weeks, your insurance carrier may limit your coverage or exclude coverage for both property and liability.

"This became a bigger issue recently, as evidenced in some states. For example, Massachusetts passed legislation requiring $1 million in liability coverage if you were renting your house out via Airbnb and other home-sharing networks," she says. "But not all carriers will increase your homeowners liability limit to $1 million. And you are still subject to the limited rental weeks allowed by your carrier."

Standard homeowners insurance generally does not cover commercial short-term rental activity, per the Insurance Information Institute. Depending on your policy, failing to disclose your rental activity could lead to:

Denied claims
Reduced liability coverage
Higher deductibles
Additional exclusions
Policy cancellation or non-renewal

That does not mean every Airbnb host needs a separate commercial policy. Some insurers offer coverage specifically for occasional home-sharing, while others offer an endorsement that expands an existing homeowners policy.

The important step is to tell your insurer how you plan to use the property before you begin hosting.

Does homeowners insurance cover your Airbnb?

Homeowners insurance may cover an Airbnb property in some situations, such as occasional rentals when your policy includes a home-sharing endorsement or specifically permits short-term guests, but it's important to discuss it with your insurance company and find out if you need more coverage.

Airbnb also offers built-in coverage for hosts, called AirCover. With that coverage and your home insurance, most potential risks should be covered.

What is AirCover?

AirCover is Airbnb's host protection insurance, which provides $1 million in primary liability coverage to the host if guests or third parties are injured or incur a loss while staying at their property. It also includes $3 million in damage protection for the host's property.

AirCover includes:

Up to $1 million in host liability insurance
Up to $3 million in host damage protection
Guest identity verification
Reservation screening
A 24-hour safety line

Airbnb liability insurance coverage will only act as the primary insurance coverage for incidents related to an Airbnb stay, but it's available to hosts regardless of their other insurance arrangements. The good news is that this coverage is provided automatically at no cost to you.

Here are two examples of when Host Protection Insurance should cover these claims:

A renter breaks her leg after tripping on your home's stairs.
A guest accidentally injures a non-guest on the property.

"This $1 million protection will be the primary policy should a bodily injury liability claim occur while a guest is staying in the home," explains Heffernan. "But remember, this is not technically 'your' policy as a host. Your insurance carrier is protecting you under the Airbnb protection. But the primary client is always Airbnb. Sometimes, your own insurance coverage provides better protection for you."

AirCover's damage protection covers:

Damage to your home and contents
Art & valuables
Auto & boat
Pet damage
Income loss
Deep cleaning

Does Airbnb have insurance for guests?

Airbnb offers a version of AirCover for guests, which offers them several guarantees about the rental. However, it doesn't cover any guest property or injuries. This coverage is provided by the host's AirCover or by the guest's home insurance, which will cover the guest's property anywhere in the world.

What is Airbnb experiences liability protection?

AirCover includes $1 million in liability coverage if a guest or third party gets hurt or your property is damaged during an Airbnb experience, including tours, events, and activities hosted or guided by Airbnb hosts. This protection is also automatically included at no additional cost, but only for covered experiences.

Examples of covered property include:

Your home
Furniture and other belongings
Certain valuables
Certain parked vehicles
Boats on the property
Certain unexpected cleaning costs

"This is liability protection for when you, the host, also take the guest on experiences or excursions. For example, if a host with horses takes the guest on a trail ride and the guest is injured," says Heffernan.

But this protection doesn't cover:

Bodily injury or property damage resulting from a non-accident (something done intentionally)
Damage to your personal property and stolen or missing items
Experiences involving mobile equipment and aircraft

"Based on the descriptions provided, Experience Protection Insurance seems to exclude any extreme sports or activities involving moderate to high risk of bodily harm," says Liu. "Hosts should contact Airbnb to confirm in writing if their specific experience is covered."

How much is Airbnb insurance?

AirCover is provided by Airbnb to hosts at no additional cost, but the website states that it is not meant to replace an insurance policy.

Condo owners and Airbnb insurance

Condo owners should review their HOA rules, personal insurance policy and building master policy before hosting on Airbnb because short-term rentals can affect both the unit and the shared building coverage.

"Condo owners should read through the HOA covenants, conditions and restrictions," Liu says. "Many condos restrict the maximum number of units that can be used for long-term rentals, let alone short-term rentals."

Consult your HOA and review its rules carefully. Also, talk with your homeowners insurance agent to confirm what's covered and what's not. It's possible that your HOA's insurance may provide coverage for you, your property and your guests.

Does renters insurance cover Airbnb?

Renters insurance does not cover you when you use a rented home or apartment as an Airbnb. Renters insurance is designed primarily for your personal property and liability as a tenant, not for operating a short-term rental business.

If you lease an apartment or other property and are seeking to rent it out as an Airbnb host, think twice. Many landlords and leases don't allow this, which may be considered a "business activity" conducted on the property. Break these rules and you could be fined or evicted.

But if your lease and landlord permit it, Airbnb's AirCover insurance should protect you and the property you're renting out.

Home sharing insurance alternatives for Airbnb

If your homeowners or renters insurance does not cover Airbnb activity, you may need a home-sharing endorsement or a separate short-term rental policy. The right option depends on how often you rent the property, the type of property you own or rent and what your insurer allows.

"Ask your homeowners insurance agent if you can add a rider to cover short-term vacation rentals," Liu says. "Or, ask if an umbrella policy is appropriate and can specifically cover claims on a short-term rental."

Liu says some companies offer or even specialize in short-term rental coverage; these include Allstate HostAdvantage, Proper Insurance and CBIZ.

But be prepared for sticker shock.

"The range of premiums can be extreme depending on the policy provider and the location of the property. I've seen quotes as high as $3,000 per year for a short-term rental policy. For comparison, typical landlord policies for a traditional long-term rental run from $500 to $1,200," Liu says.

If you aim to rent out your home for brief periods consistently to guests, "your homeowners insurance carrier may consider this activity a business," Ruiz says. "Standard homeowners insurance policies don't include coverage for business activities carried out within the home. You may need to buy a separate business insurance policy to be properly covered."

What if your Airbnb host property is a second/vacation home?

A second home you rent to Airbnb guests requires different insurance than a vacation home you use only for yourself. Regular short-term rental activity can change how the property is used and affect the coverage your insurer provides.

Tell your insurer that you plan to rent the property to paying guests. The insurer can consider factors such as:

Location
Construction type
Occupancy
Rental frequency
Number of guests
Amenities
Property management arrangements

Do not assume your primary-home policy or second-home policy automatically covers Airbnb activity.

Ultimately, if you plan to rent your second home to others, "your homeowners insurance costs will likely increase, and you may need to purchase additional coverage," Ruiz says.

Airbnb rules and laws

Before listing your property on Airbnb, check local short-term rental laws, your lease, HOA rules and your insurance requirements. A property can be eligible for Airbnb hosting under the platform’s rules but still be restricted by local law, a landlord or a homeowners' association.

Liu says some cities require a business license or restrict the maximum number of days the property can be rented out on a short-term basis. If your city outright bans short-term rentals, don't try to skirt these rules.

"In this event, you can kiss any insurance coverage goodbye," says Liu. "If a liability claim arises from your property, you likely wouldn't be covered."

When using Airbnb, it's best to play by the rules.

"Always inform your insurer about how your property is being used," says Liu. "Insurance coverage is contingent upon certain terms and conditions. If any of those are violated, coverage is likely to be denied."

Also, "do not misrepresent how the property is being used to your insurance company," says Liu. "Any material misrepresentations will nullify that protection."

Lastly, aim to have someone rent the property at least once a month if you can.

"Most companies charge a premium if the place is vacant for extended periods," says Griffiths.

What is the best insurance for Airbnb hosts?

The best insurance for an Airbnb host is coverage that protects your property and liability during short-term rentals and clearly allows the way you use the property. Some of the best home insurance companies that offer home-sharing endorsements or standalone policies are Allstate, Erie, Progressive, and Liberty Mutual.

When comparing coverage, pay attention to:

Property damage: The policy should cover damage guests cause to your home or belongings.
Liability: The policy should protect you if a guest or another person is injured on the property.
Loss of rental income: If a covered loss makes the property unavailable, the policy should help replace the rental income you lose.
Coverage limits: The limits should be high enough to protect your property and cover potential liability claims.
Deductibles: The deductible determines how much you must pay out of pocket before the insurer pays a covered claim.
Exclusions: The policy may exclude certain business activities or types of guest-related losses.
Rental frequency: The policy should allow you to rent the property as often as you plan to.

FAQ: Airbnb insurance

Can I list my home on Airbnb without telling my insurance company?

No. Tell your insurance company before listing your home on Airbnb. Your insurer needs to know how the property is being used to determine whether your current policy provides coverage or if you need an endorsement or a separate policy.

Will Airbnb pay if a guest destroys my house?

Airbnb’s Host Damage Protection reimburses eligible hosts for certain guest-caused damage, but it does not cover every loss. The program provides up to $3 million in protection for eligible property per stay, subject to its terms, conditions, and exclusions. Host damage protection is not insurance.

Do I need insurance if Airbnb already provides AirCover?

Yes, you should still have insurance that covers your specific short-term rental activity. AirCover provides host liability insurance and Host Damage Protection, but it has its own limits and exclusions and does not replace your homeowners, renters or short-term rental policy.

Can my HOA stop me from renting my home on Airbnb?

Yes, an HOA or condominium association can restrict or prohibit short-term rentals. Check your governing documents before listing the property, even if local law allows Airbnb rentals.

Can I get Airbnb insurance after a guest causes damage?

Yes, but a new policy will not cover damage that occurred before the policy started. If a guest has already caused damage, report the loss under any coverage that was in force when the damage occurred and check Airbnb’s current claim requirements.