Q: I have a client who wants to rent out their property via Airbnb. What are the insurance implications in terms of best advice?
A: According to PWC, the UK’s sharing economy could be worth as much as £9bn within the next 10 years. Home sharing is a particularly popular proposition, with companies such as Airbnb providing a platform for hosts looking to rent out their property. But is the insurance industry responding to this growing market, and do home-sharing hosts understand the implications and exclusions that could potentially invalidate their home insurance?
Airbnb does offer a Host Guarantee, purporting to “insure” people using their platform up to £600,000 for loss or damage. But, and it is a big but, cover is limited and I’d wager not many hosts would be able to recover the cost of loss or damage from it. The “Host Guarantee” only covers actual cash value, including deductions for age or wear and tear, with restrictions for high value items, and exclusions for ‘mysterious disappearance’ or shortages from an inventory. What is more they expect that in the event of loss or damage, the host should seek remuneration directly from the guest in the first instance, and only revert to the guarantee if an agreement cannot be reached. All of this must be done within 14 days, with a crime reference number, proof of ownership and value documentation – a big ask.
Of course, Airbnb do make it very clear in their terms and conditions that this guarantee should not replace the host’s home insurance, and in fairness to Airbnb they have at least arranged some protection for their hosts which those owning/renting a property that allow sharers wouldn’t have. But this is where the big problem lies. Standard home insurance policies will not cover all the risks hosts face.
Whilst most insurers will accept infrequent/short-term/occasional non-paying visitors such as relatives or friends, as a general rule renting out a room to a stranger (especially if you are charging them), even if only for a short amount of time, creates a risk insurers are unwilling to cover.
Even where an insurer does accept visitors of this nature they will almost certainly enforce restrictions. These include:
• No cover for the possessions of the visitor
• Restrictions on damage to the property/contents caused by the visitor, such as accidental loss, malicious damage, or theft unless there is evidence of forcible or violent entry
• Restrictions on valuable items of contents
Currently there is no clear consensus among insurers on this issue, and little in terms of specialist home-sharing policies. If you have a client that is looking to use Airbnb, or the like, advise them to get in touch with their insurer before they proceed – find out if they will accept paying guests, inform them about how the rented rooms will be used, and find out what restrictions/exclusions they will impose. To be forewarned is to be forearmed.
