Trust is the foundation of any business. But when it comes to protecting yourself, what home insurance should you choose for Airbnb rentals?
Airbnb represents millions of dollars in terms of transactions between private individuals worldwide. While in the majority of cases stays go well, in others it can happen that tenants steal equipment or objects from your Airbnb accommodation as they leave. How does home insurance work with Airbnb? That’s the subject of this post.
Is insurance essential when renting on Airbnb?
There’s nothing revolutionary about renting out accommodation to private individuals via Airbnb. And if you’d like to find out more about the legal framework governing this activity, follow this link. Once a property has been rented out, many problems can arise at the end of the lease. Stains on the walls, breakdowns, theft or damage to property. Airbnb therefore offers two types of guarantee to owners of seasonal rentals:
- Host Insurance: this is a free civil liability insurance policy that is activated as part of a stay concluded on Airbnb. It covers owners and tenants in the event of legal action by a third party following bodily injury or property damage, up to a limit of 800,000 euros.
- Guest Guarantee: this is activated in the same way as Guest Insurance. However, it covers owners and tenants in the event of damage to accommodation or personal property during the stay. Again, coverage cannot exceed 800,000 euros.
While these guarantees clearly stipulate some sort of coverage for owners, tenants and their property, there are a few pitfalls. Host Insurance only covers intentional acts, not accidental ones.
If, for example, either the owner or the tenant is injured during the stay, it will be essential to prove that one or the other had the formal intention of harming the other in order to benefit from this coverage. If this is not the case, both the owner and the tenant will have to resort to other means than those proposed by Airbnb, to bring the dispute to a close. This is costly in terms of time and money, with no guarantee that each party’s rights will be valued at the end of the process.
The Host Guarantee simply excludes damage to common areas, species or pets. So, in the event of theft or damage to material goods, the platform offers virtually no protection to either the host or the tenant.
As a result, it’s becoming clear that it’s absolutely necessary to have independent home insurance if you want to rent out your property on Airbnb.
Home insurance with Airbnb, how does it work?
Since Airbnb leaves both the owner and the tenant to fend for themselves in the event of theft or damage, it’s a good idea to take out insurance so that you can assert your rights in good time. Unfortunately, Airbnb-friendly insurance policies are hard to come by.
Indeed, when you rent out your home on the Airbnb platform, the insurance company considers this rental as a commercial activity. This activity is not at all covered by standard home insurance. The risk is different. What’s more, the French Civil Code requires any owner who rents out tourist accommodation to inform his or her insurer. Should this be the case, the insurer is within its rights to refuse to indemnify you in the event of a dispute or claim.
However, some insurers turn a blind eye to the fact that you only rent out your home for a few nights a year. At most, a few weekends a year. However, you should always check with your insurer, who may ask you a number of questions. Here are a few extracts:
- What is the extent of the rented accommodation (one room or the entire property)?
- How many tenants can you insure at a time?
- Will you be staying with your tenants during their stay?
- Is the spa, swimming pool, barbecue, bicycle or car included in the holiday rental contract?
- Are associated services offered (air ticket booking, paid breakfast, housekeeping)?
- What safety measures are available to tenants in rented accommodation (fire extinguishers, smoke detectors, etc.)?
In the vast majority of cases, when security measures are in place and the number of tenants is limited, insurers will agree to cover your home and your tenants without changing anything in the home insurance contract. On the other hand, the insurer can simply terminate the contract that binds him to you and your home.
However, it is still possible to negotiate with your insurer the number of days per year that your property can be rented out on Airbnb. You can also increase your home insurance premium, or compartmentalize your coverage by excluding coverage for vandalism, for example. Some more demanding insurers will suggest (in fact, require) that you take out comprehensive insurance.