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In the first quarter of 2019, more room nights were booked through Airbnb than through Expedia

Airbnb Owners Must Consider Insurance Implications

Sept 2019


In the first quarter of 2019, more room nights were booked through Airbnb than through Expedia, signalling the rise of Airbnb as a growing force in the worldwide hospitality sector[1]. The attractiveness of renting out rooms or a property through this big-brand name is likely to increase, but will all those heading down the Airbnb route consider the insurance implications?

Offering rooms through Airbnb can be lucrative, especially as UK-based renters can benefit from the Rent a Room scheme and earn up to £7500 tax-free [2], when renting out a spare room, or the whole of a house. But, it is how it is viewed by insurers, freeholders and mortgage lenders that can lead to it being problematic and potentially costly.

In effect, homeowners are turning their homes into B&Bs but, whilst a B&B owner usually recognises the need to have a variety of commercial insurances in their protection armoury, a private Airbnb member could be over-reliant on the Airbnb Host Guarantee, which covers around £780,000 of damage caused by guests [3].

Whilst this may sound more than sufficient, there are holes. Should a guest’s pet decide to chew up your furniture, damage would not be covered. Any common areas of the property not featuring in the listing are similarly not covered for damage, whilst cash, securities, jewellery and collectors’ items, including works of art, are not protected. Given that an Airbnb member in London had an £8000 Banksy print stolen from their property, with little support then provided to trace the culprit, these things can matter hugely.

There is the option of Airbnb Host Insurance [4]. However, should you inadvertently rent out your home to individuals who wish to trash it, you would find that intentional damage is not something for which you would be compensated. Neither is a loss of electronic data, or loss of earnings. Again, the small print matters.

The reality is that anyone considering renting out their home needs to check that their home insurance provider, freeholder (if the property is leasehold) or mortgage lender are aware of the situation and that the appropriate sums have been paid, if the insurer, freeholder or mortgage lender agree to the rental, on different financial terms, rather than disallowing it outright.

Even if home insurance policies allow for such rentals, there could be key exclusions, such as theft and accidental damage caused by guests. Your policy may similarly not allow smoking, leaving you to pay for fire damage, should this occur, and the insurer discover that a smoker has been resident. There could be a variety of other clauses within the small print, which would leave you exposed, should you need to claim.

The respected Money Saving Expert website [5] recommends that you present your individual circumstances to a local broker, who can offer you bespoke advice and tailor cover to suit your property and the use of it by Airbnb members. If you wish to follow this advice, you can use our ‘Find a Local Broker’ tool and take the vital steps towards getting the right protection in place for your Airbnb ambitions.

Sources:
[1] https://skift.com/2019/08/22/airbnb-beat-expedia-in-booked-room-nights/

[2] & [3] https://www.moneysavingexpert.com/family/airbnb-hosting/

[4] https://www.airbnb.co.uk/help/article/279/what-is-the-airbnb-host-guarantee
[5] https://www.moneysavingexpert.com/family/airbnb-hosting/

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