In the summer of 2011, a San Francisco homeowner returned home to find her Airbnb-listed flat destroyed and her belongings ransacked. A locked closet door was smashed open and personal keepsakes were stolen including family heirloom jewelry, a passport, cash and credit cards. They used the home’s scanner & printer to copy the owner’s social security card and birth certificate and even stole an external hard drive loaded with family photos and journals. Only when her story went viral did AirBnB take notice.
In 2015, the most widely publicized destruction of an Airbnb rental occurred in Calgary, Alberta where damages reached upwards of $75,000-$150,000 depending on the news outlet. The damage was unfathomable as a ‘biohazard’ team was required to decontaminate the house. The owners were so distraught that they “wished the house had burned to the ground” rather than have to live in the home again.
Does Your House Insurance Cover You When You’re Away?
While these incidents are rare, it underlines the need to be properly covered by house home insurance company. In many cases, your insurance policy doesn’t cover you while you’re away from your home.
The Insurance Bureau of Canada (IBC) commented that this is an important reminder that typical homeowner insurance policies only provide coverage when you’re occupying your own home.
“It’s a completely different story when you use your home or cottage as a rental property, said IBC’s Steve Kee. That’s something that you would have to talk to your insurance representative about”
Understanding Airbnb’s ‘too good to be true’ Coverage Guarantee
Airbnb boasts an extremely dramatic-sounding $1,000,000 Host Guarantee for damages caused by guests. This ‘guarantee’ theoretically covers damages caused by guests of up to a $1million. That sounds like a lot of coverage, however, there are several insurance adjusters and market experts that are sounding the alarm on this claim since this coverage only kicks in when your existing house insurance is completely exhausted. Your pre-existing insurance will always be the primary coverage with the Airbnb coverage considered ‘in excess’ of the host’s current policy.
Here’s an excerpt from Airbnb’s Host Guarantee Terms and Conditions:
You must use your best efforts to seek recovery from the Responsible Guest for any Covered Losses. If you are unable to recover such Covered Losses or damages within a reasonable period, then you must seek recovery to which you may be entitled, from any person or entity other than the Responsible Guest or Airbnb, with respect to such Covered Losses.
In layman’s terms, a claimant would need to spend a considerable amount of time chasing down your guest and after that, work with their current insurer. Then once that is exhausted, they would then begin the claim process with Airbnb. This process could take months and possibly years to resolve.
In 2014, an L.A. interior designer was refused a $10,000 claim by Airbnb. There was a flood, caused by the guest, which occurred late at night, and dissipated before the next guests arrived. In fact, 2 more sets of guests stayed at the apartment before the homeowner returned and was informed by the building manager. There was extensive damage to one other apartment and the common area as the flood water poured out into the hallway, lobby and into another residence.
Airbnb’s official response what that the Host Guarantee only covers the hosts home and won’t cover any damage outside the residence. Further your claim is void if more guests stay at the home after the damage occurred. Since most of the damage occurred in the common area and another condo, the homeowner was on the hook for $10,000.
Lean on Harbord Insurance For Expert Advice and Consulting
The long end of this cautionary tale is to reach out to your home insurance expert as soon as possible if you are considering short term rentals in your home. There are many other short-term rental websites out there, and not all of them have adequate insurance coverage. Have your insurance provider examine the fine print on their policies before you open your home up to potential vulnerabilities.
Be out front and honest or you might find you are on the hook for thousands of dollars in uninsured damages.
We are here to help and would be happy to examine your policy with you so you can have peace of mind as you travel the world.
