THE BLOG
07/01/2016 02:42 pm ET Updated Jul 01, 2017

Airbnb Offers Insurance But Coverage Is Far From Comprehensive

Airbnb hosts are covered by an insurance policy provided by the home-sharing service, but not everything is covered. The policy is hardly comprehensive and renters need to be aware of what is excluded if something were to happen that would warrant a claim.

This especially important in larger U.S. cities, such as New York, where Airbnb listings account for as much as 17 percent of temporary rooms, according to a Barclays research report.

What Airbnb Will Cover
Airbnb's Host Protection Insurance covers hosts -- free of charge -- with up to $1 million of liability and property damage claims from third parties.

That means the policy will cover a liability claim in the event a guest slips and falls in the temporary rental and files a lawsuit against the host. It would also cover a lawsuit against the host from someone injured by the guest on accident. For example, if the guest dropped a suitcase on another tenant in an apartment building.

In some cases, the Airbnb's Host Protection insurance will also cover a lawsuit a guest might make against a host's landlord or property owner. An example of this might be if a guest well using a communal gym and sued the building owner.

What Airbnb Will Not Cover
The Host Protection Insurance is a great perk to have but there are some gaps in the coverage. Without an independent homeowners or renters insurance policy, Airbnb hosts are leaving themselves susceptible to serious financial risk.

Airbnb's Host Protection Insurance does not cover the personal property of the host. That includes furniture, electronics and other belongings. It is plainly stated on Airbnb's website, but a host who doesn't pay attention to the details of the home-share service's policy might wrongly assume otherwise.

For example, if a guest were to damage a couch or steal a watch belonging to the host, Airbnb would not be responsible.

Airbnb is not responsible for any issues with a listed property that might cause damages to a guest or the guest's property. For example, if an apartment has bed bugs or mold that cause harm to the guest or their property, that is not Airbnb's problem. The home-share service's insurance policy will not cover a claim in that circumstance.

Slander and defamation are also excluded from Host Protection Insurance coverage. Both can be grounds for a lawsuit and if a guest sues a host for either one, the host will not be able to file a claim through Airbnb.

Harm caused by intentional criminal acts are obviously excluded, too. Essentially all insurance policies have this exclusion, including private homeowners and renters insurance.

How Hosts Can Protect Their Belongings
Most homeowners and renters insurance policies will cover a policyholder's personal property if it is damaged by a home-share service guest.

Almost every homeowner has a homeowners insurance policy (mortgage lenders require a policy to be in force) but fewer than half of all renters have renters insurance. Whether someone uses Airbnb or not, it's a good idea to have insurance -- the average annual renters insurance premium in the N.Y. is only $215. For those who do host guest using Airbnb, they can assume they will be covered.

Hosts just need to be careful they don't host guests to frequently that their insurance company considers it "commercial activity." Usually, insurers have a threshold of days per year that home-share service guests must stay in a home for the activity to be considered commercial and then excluded from coverage.