Airbnb Owners Need to Focus on Insurance Holes

03/12/19 General
b&b
Airbnb’s booked room-night figures exceeded those of giant Expedia in Q1 2019 [1], highlighting that the Airbnb phenomenon really has shaken up the global hospitality sector.  Renting out rooms or entire properties through Airbnb is likely to prove attractive to more people in future, but with that thought comes an insurance requirement.
Becoming an Airbnb host can be lucrative.  In the UK, renters can earn up to £7500 tax-free [2], under the Rent a Room scheme.  However, whilst HMRC may be obliging, insurers, freeholders and mortgage lenders may not be as flexible.
Homes being rented out through Airbnb are, in the eyes of the authorities, being made available in exactly the same way as those in a traditional B&B and yet a traditional B&B owner would almost inevitably have a variety of commercial insurance covers in place, whilst most Airbnb hosts do not.
Many Airbnb members rely on the Host Guarantee operated by Airbnb, which offers protection up to a value of around £780,000 for damage caused by guests [3]. This may sound sufficient, but holes can be picked in the cover. Pet damage is not covered – the same being true of any damage arising in common parts of a property that do not feature within a listing.
Other things unprotected are cash, securities, jewellery and collectors’ items, including works of art.   A high-profile demonstration of this fact came with the theft of an £8000 Banksy print from an Airbnb member in London.  The Airbnb renters reported being given very little support when it came to tracing their light-fingered guests.
Airbnb Host insurance is available [4], but again this can let the property owner down. Any intentional damage – malicious or otherwise – is not covered.  The same is true for loss of earnings and loss of electronic data.  The small print can truly catch a host out.
Home insurance providers, mortgage lenders and freeholders (if the property is leasehold), all need to be advised of the use of the property as an Airbnb rental.  Each may then impose different terms on the homeowner, whilst it is not impossible for this rental use to be completely banned.
If the use is allowed, exclusions in the insurance cover may be imposed, with any future claims for theft and accidental damage by guests, for example, being declined. Some home insurance policies do not allow smoking, so if smoking guests are accommodated and a fire results, the homeowner could be left picking up the cost of repairs. A number of other exclusions may lurk within the small print, meaning that the renter is taking a big risk, for the returns that renting out property through Airbnb bring.
The Money Saving Expert website [5] suggests that those considering becoming an Airbnb host talk to a local broker, to access tailored cover to suit their rental premises or rooms and their usage by Airbnb guests.  If you are considering becoming an Airbnb host, but do not wish to be caught out by your cover, please get in touch.
Sources:
FPS751