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10 Things Home Sharing Hosts Should Know About Insurance and Liability

The kitchen of a rental property on a home sharing site with four wooden chairs around an island.

A St. Louis-area woman began renting out a room in her Maplewood home in October 2016 through Airbnb, a popular online platform offering short term homestays as an alternative to staying in a hotel. This income helped offset a significant tax increase after her home’s property value rose more than $100,000 from its previous assessment.

Then, the homeowner was hit with a $100 fine for violating city rules for short term rental properties, and her business was suspended for failing to obtain a permit and business license.

This situation, originally covered by the St. Louis Post-Dispatch, demonstrates just a few of the hidden challenges of listing a property on a home sharing website such as Airbnb or Vrbo. If you have considered becoming a short-term rental host, here’s what you need to know about home sharing insurance and liability before publishing a listing for your home or apartment.

A Closer Look at the Short-Term Rental Market

Similar to how ridesharing apps Uber and Lyft disrupted the transportation industry, Airbnb and Vrbo have emerged as fierce competitors in the hospitality market.

Instead of booking a room in a hotel, travelers worldwide can use a home sharing site to book a bedroom, apartment, guesthouse or an entire single-family home. Short-term rentals in many markets offer prices that are competitive, or perhaps even less expensive, than a traditional hotel. And the income generated by hosts can be quite enticing.

Some of the most popular online home sharing platforms include:

  • Airbnb;
  • Vrbo;
  • FlipKey; and,
  • Homeaway.

Signing up to become a host on one of these platforms is fairly simple — but there are several precautions hosts should be aware of in order to avoid fines and penalties, or worse: losing your Homeowners Insurance coverage.

10 Things You Should Know About Becoming an Airbnb Host:

1. A standard Homeowners Insurance policy does NOT cover home sharing.

A typical Homeowners policy provides coverage for the risks associated with owning a home, such as unexpected storm damage, burglary, and accidents or injuries that happen on the property. Commercial or business activity is almost always excluded. This applies to everything from running a home-based business to renting out a bedroom.

If you engage in commercial activity on your property and your Home Insurance policy forbids it, your policy can be canceled, and any claims denied.

2. If your property is rented or leased, you must get the landlord’s permission to sublet.

If you do not own your apartment, condo or rental property, your landlord has a vested interest in knowing exactly how their property will be used — whether you are home sharing, subletting to another tenant for a few months during the summer or otherwise.

Ask your landlord if they will allow you to list a property on Airbnb, Vrbo or another home sharing site. Then, talk to your insurance broker about your Renters Insurance policy to make sure you have the right protection in place.

3. There are risks associated with bringing guests into your home.

Out-of-towners may come and go and leave behind some unexpected surprises. This could include:

  • Property damage. From soiled sheets to a shattered picture frame, broken appliance or worse. Ever heard of the house guest who accidentally jammed the garbage disposal and kitchen sink with potato peels?
  • Criminal activity. While sites like Airbnb allow hosts to set “house rules,” that may not stop unruly guests from hosting a party or using controlled substances.
  • Guest injuries. It’s one thing if a friend is injured on your property, but quite another if that person is a guest — or a stranger who was invited over by your guest.

4. Many cities, counties, HOAs and other municipalities have home sharing restrictions.

Short-term rentals are not allowed in several communities in the St. Louis area, including Chesterfield, Crestwood, Hazelwood and Maryland Heights.

According to a 2018 article in the St. Louis Post-Dispatch, short-term rentals are also banned in Clayton, Ladue and Frontenac. The properties are allowed with restrictions in Ballwin, Maplewood, Webster Groves, Ellisville and within the city limits of St. Louis and St. Charles.

Always check with your local government about policies surrounding short term rental properties.

5. Home sharing platforms offer limited protection for your personal property.

Airbnb offers Host Protection Insurance of up to $1 million USD to help protect against third-party In other words, this program helps protect a host in the event where a guest files a lawsuit or claim against them for damages.

This robust policy does not protect the host from any damages they incur — instead, this would correspond to the platform’s “Host Guarantee.”

6. Airbnb’s Host Guarantee has several important clauses.

Like any policy, Airbnb’s Host Guarantee has some very important fine print. This agreement helps provide some personal property protection for hosts on the platform and its acceptance is mandatory.

One of the most important considerations is:

“The Airbnb Host Guarantee is not an insurance policy.”
Airbnb offers their own free Host Guarantee program to help protect hosts. They investigate all requests for reimbursement and are not “contractually obligated” to fulfill a request if it does not meet their guidelines.

7. Host Protection Insurance has coverage exclusions.

We’ve mentioned that Airbnb’s Host Protection Insurance does not apply to a host’s personal property damages. Also worth noting? The Airbnb website says Host Protection Insurance applies to “common areas of a property outside of the listing itself,” such as a building lobby.

8. Hosts are subject to booking fees and other expenses.

Home sharing platforms earn revenue through a service fee on each booking. Although Airbnb offers two fee structures, the typical host service fee is 3% for each guest and is automatically deducted from a host’s payout — and let’s not forget about taxes.

The IRS has a “14 day rule” which states that you can be taxed on income from rentals if you rent your home or bedroom more than 14 days during the year. To learn more about how hosting a short-term rental may affect you, please consult a tax professional.

9. Without a Home Sharing policy or endorsement, you could be exposed to coverage gaps.

A standard Homeowners policy does not provide coverage for home sharing. And the protection offered through Airbnb’s Host Guarantee program has several gaps that could leave you on the hook for repairing or replacing your belongings.

Hosts who rely on Airbnb’s Host Guarantee to protect their belongings are subject to these and several other coverage exclusions, including:

  • Lost or stolen money;
  • Lost or stolen shipments;
  • Luxury items, such as jewelry;
  • Identity theft or fraud; and,
  • “Ordinary wear and tear.”

10. Several insurers offer a Home Sharing endorsement.

In response to the booming homestay market, several insurers offer a separate policy or policy endorsement for hosts who need more than standard Homeowners Insurance protection. Webb Insurance represents multiple top-rated carriers who can provide coverage in all 50 of the United States. 

Find the Right Home Sharing Insurance

At Webb Insurance in St. Charles, we understand how technology creates new opportunities to generate income. We also have the expertise you need to feel confident that your home and business are protected with insurance coverage that’s tailored to your unique needs, including home sharing. As an independent broker, we can also quote multiple insurance carriers to ensure the most affordable and complete coverage, and are able to provide coverage no matter where you’re located in the United States.

Contact our office to discuss your questions about home sharing with a member of our team.

Or get a free quote for Homeowner’s Insurance with no obligation to purchase.