The growth of short-term property letting is best typified by the incredible success of Airbnb that now has over one million listings and has welcomed over one billion guests worldwide.
However, despite the growth many individuals are unaware of the specialist insurance needed sometimes for this activity which is also known as ‘Host Insurance’. Host Insurance provides specific cover for all short-term letting activity such as:
Many assume the above short-term letting activity will be covered by their traditional home insurance or landlord insurance policies, however, this is not always the case and insurers may not pay out on claims relating to theft, accidents or damages that occur in the property or the properties occupants during a guest stay.
Knowing the differences means you can find out exactly kind of cover you need. If you have home insurance, you may already be covered for certain eventualities, so check your policy documents first.
Specialist host insurance will cover landlords who let their property to paying guests.
It will normally cover claims for guest injuries and property loss, or damage caused by hosting activities. It may also include cover for:
You won’t be covered for claims that come under a standard home insurance policy, like cover for damage due to fallen trees or a flood, for example.
You also won’t be covered for claims arising from expected costs for things such as wear and tear, cleaning and fumigation, or small breakages or accidents that would be covered by a damage deposit.
If the accommodation is going to be unoccupied for a long time, it could be worth considering unoccupied home insurance.
Standard home insurance policies tend not to cover you for commercial use of your property – whether that’s letting a room or letting your driveway. Such usage will probably invalidate your policy.
Home insurance policies also tend not to cover you for theft where there was no forced entry (for example, theft by a guest). However, dedicated host cover should include malicious damage and theft where there’s no forced entry.
Generally you’ll still need a home insurance policy, as host insurance only offers supplemental cover if you let out your home to paying guests.
Make sure you read the policy details carefully before purchasing to ensure you’re covered for what you need.
While Airbnb’s host insurance aims to cover you in the event of property damage, it’s not an insurance contract. This means you may not have suitable cover for damage due to hosting or guest activity as you’re not able to go to the FCA should something go wrong.
It won’t cover communal areas or loss or theft of keys either. If you get in to a dispute with a guest, Airbnb will ask you to try and resolve the matter with the guest first, which may not be appropriate in the case of criminal activity or personal injury.
The Host Protection Insurance Programme unfortunately won’t cover you for intentional acts including assault, accusations of slander, damage to electronic data or any accidents involving vehicles.
If you’re a host, you should investigate independent insurance to cover your valuables such as jewellery, artwork, or collectibles which only have limited protection under the Host Insurance Programme. You may also want to tidy away your most precious possessions when you’re hosting, to be on the safe side.
Airbnb asks all hosts to "review and understand the terms of their insurance policy and what it covers and does not cover”.
Before deciding to host paying guests, you should:
Check whether you’re allowed paying lodgers with your landlord or mortgage provider
Check your home insurance – it probably won’t cover paying guests
Make sure you have suitable smoke alarms, carbon monoxide monitors and furniture. Give your property a good clean too
Work out your damage deposit and set the letting price
If you’re living in London, you’ll need to bear in mind that if you’re letting your entire place out short-term, you’ll only be allowed to take guests for a total of 90 nights per year under the 2015 Deregulation ActAccording to Painsmith
You have 14 days to cancel your policy. As long as you haven’t made a claim, your policy has not started already, and you’ve purchased annual cover, you will be refunded the full cost of your policy.
If your policy has started and you cancel within the first 14 days, you will receive a refund on a pro-rata basis.
There is likely to be an excess on your host insurance policy, usually up to £250, however read your policy carefully as the excess may differ for different types of claims (these will be shown on your policy schedule).
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Worldwide guest arrivals to Airbnb accommodation. Source: Airbnb about us.