Insurance risk warning for Airbnb hosts

13 November 2015 | Many Australian hosts are leaving themselves exposed to damages claims.

Risky business

Some Airbnb hosts in Sydney are earning $30,000 per year by renting out their home to short-term visitors.

It's a more affordable option for savvy travelers, yet it's a potential minefield when it comes to insurance. The business of renting your home for short-term accommodation isn't regulated like the hotel industry, and safety of the guest is likely not covered by insurance.

Staying in someone's home can be cheaper and give you a more personal, local experience. But what are the risks? Read our guide to using Airbnb.

Australian hosts exposed 

The risks to Airbnb hosts were highlighted this week when a man died at an Airbnb rental property in Texas. The father was killed in a freak accident involving a swing. In this case, the home insurance provider paid compensation to his family, but in Australia most insurance providers do not cover Airbnb hosts and their tenants, meaning if it happened here the host and Airbnb could be sued.

The self-regulated accommodation platform has become one of the most popular home-sharing sites in Australia. Our online survey earlier this year found that of the 400 people surveyed, nearly 20% had tried Airbnb.

In Australia, more than 40,000 homes are for rent through Airbnb. Insurer IAG told Fairfax that of 200 share home hosts they surveyed, 54% were unsure of how their share home activities were covered by their insurers.

What insurance is available?

Airbnb offers $1 million in property protection, but the payments are subject to certain conditions and shouldn't be considered as a replacement or stand-in for landlords' or home-owner insurance. Also, don't assume that your existing insurance will protect you either. For example, typical landlords' insurance will only insure stays longer than 90 days and might require copies of residential tenancy agreements.

Insurers would do well to take advantage of this gap in the market, brought about by the disruption of the 'sharing economy'. NRMA Insurance has launched a new offering, ShareCover – home and contents insurance for people renting out their homes and properties for short-terms stays through sites such as Airbnb and Stayz. It covers home-owners for theft, malicious damage, accidental damage and personal liability.

If you're thinking of renting out your home for accommodation, don't assume that your basic home insurance policy covers you – check with your insurer. 

Is it time to review your cover? See what we recommend in our home and contents insurance reviews.