Do I have cover when I rent my house on Airbnb?
There’s a different set of risks when you host short term guests, and insurance companies generally don’t like this. Before you list your property on Airbnb you should check that your policy covers holiday-bookings.
Effects on Insurance
Higher risk guests in your house means that insurers want to know about it. If you haven’t already, you should tell your insurer that you host guests, and ask what this means for your cover.
If your insurer allows guests, a higher additional excess or premium will usually apply. For example, an extra $500 excess applies to damage by guests. If your standard excess is $700, you’ll need to pay the first $1,200 for guest damage.
Some insurers will completely exclude cover for guests. This puts you at risk of being uninsured. If you are unsure if you are covered, it’s best to contact your insurer or read your full policy wording.
Doesn’t the Airbnb Host Guarantee cover damage?
AirBnb regularly promote their $1USD Million of Host Guarantee cover. But be warned; this guarantee is not an insurance policy, and rather a promise to cover under certain conditions. The guarantee is not a formal insurance policy and is not regulated by New Zealand’s Financial Markets Authority.
There’s many well publicised stories of hosts being left disappointed by the Guarantee. Usually hosts are not aware of the full cover, requirements and conditions of the Guarantee.
The conditions required by the Host Guarantee are lengthy. The primary requirements are:
Host Guarantee Requirements
- Inspect your house and report damage within 14 days of the responsible guest’s stay, or before the next booking
- You must lodge your claim with Airbnb Resolution Centre within these 14 days or else your claim is invalidated.
- If guests have broken the law, you must supply a police report file which is certified by you as true and correct. Provide extensive proof of ownership of, or legal responsibility of your items. This can be receipts, photographs, videos, documents or other forms, including appraisal or valuation forms. These must be certified by you as true and correct, and reasonably acceptable by Airbnb.
- Within 30 days of the damage you must complete and file an Airbnb Host Guarantee Payment Request Form, and deliver a signed and sworn proof of loss to Airbnb.
Host Guarantee Conditions
- Only damage that occurs during the booking period in your listing is covered. If a guest overstays their welcome, then causes damage you will not have cover.
- Cover only applies to part of your house that’s included in your listing. If you rent one room, but the guest causes damage in another bathroom, cover will not apply.
- There are various exclusions. For example, damage from excessive use of water or utilities, and any damage by animals/pets are excluded.
- Rent loss cover only applies to confirmed bookings, that are then cancelled because of damage (not future bookings).
Please note: this is not an exhaustive list. You can read the full terms and condition of the Host Guarantee here.
Airbnb themselves suggest getting a specialist insurance policy, rather than relying on the guarantee. Part of the requirements under the guarantee is that you first seek recovery for damage from your primary insurer. Below is an extract from Airbnb’s website.
“The Airbnb Host Guarantee is not an insurance policy. To the extent you desire protection beyond the Airbnb Host Guarantee, Airbnb strongly encourages you to purchase insurance that will cover you and your property for losses caused by Guests or Guests’ invitees in the event your loss is not within the terms of the Airbnb Host Guarantee.”
Airbnb suggest hosts should get their own policy that covers guest damage.
How can I get the right cover?
Initio was the first in New Zealand to provide a house insurance policy specifically designed for short term guests. We offer a hybrid house, contents and guest insurance policy specifically designed for Airbnb rentals, that doesn’t come with the strict conditions of the host guarantee.
No additional excesses apply, with competitive and affordable premiums.
Our policies include cover for:
- Accidental Damage by guests
- Intentional Damage by guests, up to $25,000 (i.e. guests throw a party)
- Loss of Rent – for confirmed bookings cancelled and an estimate of future bookings lost.
- Meth Contamination – from manufacturing.
- Liability – if someone is injured in your house, we will cover re-mediation costs.
It’s your best protection when listing your property on platforms such as Bookabach and Airbnb.
The only requirement we have is that you occasionally use your house yourself. We can not insure a full time Airbnb unit as these are considered commercial operations (similar to a motel), and a commercial insurance policy is required.