8 Costly Insurance Mistakes Airbnb & VRBO Hosts Make (And How to Avoid Them)

These are eight common business insurance mistakes short-term rental hosts make:

1. Relying on the Home-Sharing Platform’s Coverage

Airbnb and VRBO offer hosts some form of insurance, but their coverage tends to be limited or insufficient.

Airbnb’s AirCover program offers up to $3 million in damage protection for hosts’ buildings and contents, plus $1 million in liability coverage if a guest is injured on the rental property or their belongings are damaged. That sounds reasonable.

Unfortunately, reimbursement for a host’s damaged property isn’t guaranteed. AirCover isn’t a full property insurance policy, and it doesn’t apply to any guest bookings made on other platforms, such as VRBO or Booking.com.

Meanwhile, VRBO’s liability insurance for hosts includes $1 million to cover guest injuries or damage to guests’ belongings while on your property. However, it doesn’t protect a host’s property or contents, and if your guests decline to buy optional damage coverage from VRBO, you’ll have to pay for damages they cause yourself.

Prevent this by: Getting a customized Airbnb insurance or VRBO insurance policy from Zensurance. Both short-term rental property policies are designed to cover guest bookings via any platform. 

If you file a claim, we’ll navigate the process on your behalf and work with your insurer to get the matter resolved quickly. Plus, as the policyholder, you get to choose your policy’s coverages and coverage limits and discuss your options with a licensed insurance broker.

2. Believing Homeowner Insurance Covers Property Rentals

A homeowner’s or standard home insurance policy typically excludes coverage for business-related activities. All types of insurance policies feature exclusions, and being a short-term property property rental host is a business activity.

If a host relies on their home insurance policy while renting a space or an entire house to a guest, and the guest damages the host’s property, the home insurance provider is likely to deny the claim. The insurer may even cancel the host’s home insurance policy altogether.

Prevent this by: You guessed it – getting a business insurance policy that’s designed for short-term property rental hosts.

3. Failing to Maintain the Upkeep of Rental Properties

Whether you’re an experienced Airbnb or VRBO host or new to the short-term rental industry, taking preventative maintenance measures to address wear and tear and safety issues is vital.

For example, trip-and-fall accidents that injure guests are among the most common third-party liability risks for short-term rental property owners. And if a guest sues you or threatens to, the cost to defend yourself can cost tens of thousands of dollars.

Prevent this by: Conducting regular maintenance inside and outside your short-term rental property is essential. Fix any potential trip hazards, ensure all systems (such as the furnace, air conditioner, kitchen appliances, and lighting) are functioning correctly, and address issues like leaky faucets or toilets immediately.

4. Keeping Accurate Pre- and Post-Stays Documentation

As part of any commercial property insurance policy, you should maintain an accurate record of the condition of the property and your business contents.

For short-term vacation rental hosts, it’s wise to have documentation of the condition of their properties before and after each guest’s stay. You’ll need this information to expedite a claim filed for damage to your property.

Prevent this by: Take photos and videos, and detail in writing the property’s state before guests arrive and after they depart. Save digital copies of this documentation in secured cloud storage in case you need to access them.

5. Not Requiring Guests to Provide Security Deposits

Most guests will enjoy their stay without incident, but what if damage occurs?

If you rely on a home-sharing platform’s limited coverage to pay for damages to your property or theft of contents, you could wait a long time for the platform provider to help. That leaves you on the hook to pay for damages or replace items in the meantime.

Prevent this by: Requiring all guests to provide a refundable security deposit when they book their stay.

6. Not Accounting for Seasonal Risks

You might only be interested in short-term property rentals in the summer or year-round. Either way, seasonal liability risks should be considered as part of routine maintenance on a rental property.

For instance, icy sidewalks and driveways can lead to guest injuries in the winter, holiday parties guests throw that get out of hand and cause damage to your home or cottage, or the threat of flooding that comes each spring.

Prevent this by: Hire a snow removal contractor to clear snow and ice from your short-term rental, set strict rules against large parties, and ensure your business insurance policy covers risks like water damage.

7. Accepting Guests Without Knowing Municipal Tenancy Laws

Most municipalities have established regulations or bylaws governing short-term rentals. Some cities have enacted bans on private short-term rentals or have bylaws in place to account for long-term rentals.

If you violate these bylaws or regulations, local authorities could fine you heavily.

Prevent this by: Knowing your municipality’s bylaws and abiding by them is the best way to avoid fines and legal wrangles. If need be, consult a lawyer to advise you on such matters.

8. Failing to Enhance Security Measures

Protecting your property and guests means ensuring adequate security measures are in place. 

If a guest is injured on your property – for instance, if a fire ignites in the kitchen and the smoke detector fails to signal, leading to smoke inhalation – you could be held liable for not ensuring the property was safe.

Prevent this by: Ensuring necessary security and safety measures are in place, including working smoke and carbon monoxide detectors, providing a first-aid kit and fire extinguishers, and providing guests with an emergency phone numbers list.

How to Get Customized, Reliable Short-Term Rental Property Insurance

Zensurance is Canada’s leading small business insurance provider, serving over 350,000 Canadian small businesses and self-employed professionals across hundreds of industries, including landlords and Airbnb and VRBO hosts.

Let our knowledgeable, friendly team of licensed brokers quickly get you the customized Airbnb insurance or VRBO insurance policy you need.

Fill out our online application for a free quote.

We’ll shop our partner network of over 50 insurers to get the low-cost policy you require, answer your questions, and ensure you’re adequately protected so you can focus on wowing your guests.

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