Tags: insurtech

One of the questions we get asked most frequently by Airbnb hosts is, “Doesn’t Airbnb already cover me?” In fact, we heard this very question from hosts in the Protect Your Guests, Protect Yourself session at the Airbnb Open conference in Los Angeles.

The simple answer is no. The protection Airbnb offers to its hosts is limited, covering only damage caused by a “Responsible Guest” - a fraction of the potential damages from a stay gone wrong. Airbnb’s protection, which the company refers to as its “host guarantee program”, claims Airbnb will help a host recover damages caused to their home during a guest’s stay. But this guarantee is not meant to replace an insurance policy: while it assures hosts that Airbnb will attempt to help them recover damages, it’s meant as a contingent plan, not as a replacement for comprehensive insurance.

In fact, Airbnb recommends that all their hosts obtain their own insurance policy that, unlike Airbnb’s guarantee, fully protects their assets and liabilities. You can find that recommendation in Airbnb’s terms and conditions here (#7, 7th paragraph). Until Slice launched its homeshare business insurance policy, Airbnb hosts’ only real option was a commercial insurance policy, which is prohibitively expensive.

Here are the reasons homeshare hosts cannot—and should not—depend on the Airbnb protection program:

1. It’s not insurance

From the perspective of the Host, Airbnb’s host guarantee is not an insurance policy. How do we know? Because Airbnb says so in their Terms of Service (section II, third paragraph). Notice that the insured entity is Airbnb, not the Host. In fact, the Terms of Service clearly state in Section V that “YOU ARE NOT AN INSURED…”. There is no insurance policy issued to the Host. Furthermore, there is no requirement that a host be fully indemnified for damages, as the plan will deduct depreciation and obsolescence, meaning the damaged property could be deemed to be worthless.

2. Hosts must contact guests directly first

The terms of the Airbnb host guarantee stipulate that a host must attempt to recover damages directly from the guest/s before seeking assistance from Airbnb. This means the host is put in the uncomfortable and potentially distressing position of confronting the guests him or herself, something an insurance company’s lawyer would usually do. Airbnb will respond to a claim if the host first meets this condition and 17 other conditions (section IV).

3. Hosts are expected to rely primarily on homeowners’ insurance  

The host guarantee also requires that a host disclose the details of any existing insurance covering the damaged property, which would most likely be homeowners insurance. The expectation is that Airbnb’s insurers will contact the host’s insurers. This is problematic: the homeowners policy is unlikely to respond to the claim, because renting the home on Airbnb most likely violates the representations the host made in their insurance application - in addition to the other restrictions and exclusions in homeowners policies regarding business activity. Moreover, once an insurer is aware the home is being rented through Airbnb, it will either rerate the policy or may cancel it entirely.

4. Hosts are not named on the Airbnb policy  

The Airbnb policy is issued to Airbnb, not the hosts. That means that the hosts are not the “named insureds”; their names do not appear on the policy, and they don’t own the policy. Consequently, hosts have no rights under the Airbnb policy. Airbnb alone makes the decision whether or not to submit claims to their insurers, without any input from hosts.

5. You share insurance limits with every other Airbnb host 

Airbnb’s liability policy carries an annual aggregate limit shared by all 640,000+ Airbnb hosts. Airbnb has an enormous amount of rentals per night, sometimes over two million, and each claim a hosts makes against the liability policy reduces the aggregate limit of coverage. That makes it very possible for the entire limit of insurance to be exhausted long before the end of the policy year. In that case, when a host submits a claim, there could potentially be no coverage remaining at all.

Even Airbnb recognizes that homeshare hosts are not properly protected by their plan, and recommends that hosts secure their own insurance coverage.

At Slice, we provide on-demand, pay-per-use insurance to homeshare hosts, so you never have to rely on Airbnb or any homeshare company for protection. We understand that commercial policies are onerous and exorbitantly expensive, and particularly inappropriate for the many hosts who only rent their homes part-time. That’s why we sell coverage for only the slice of time your home is being rented. Our policy offers replacement cost limits on property and a $2,000,000 limit for liability, at a fraction of the cost of commercial insurance - without the friction of a complicated and onerous application form.

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