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Airbnb: Are you insured to rent your home?

Airbnb has made it easy for people to rent out their homes and make some extra cash. 

The home-sharing company puts homeowners in touch with people looking for places to stay, meaning you could use your property to generate an income.

But before you start booking in guests it’s important to understand the risks.

A loft room in a house on airbnb

For instance, you need to check whether your mortgage provider will be happy with you renting out to strangers. 

You also need to protect yourself in case personal items are damaged or missing. And it’s crucial to make sure you have the right home insurance in place to cover you if something goes wrong.

To make life simple, here’s our guide to ensuring you have the right permissions and protection in place before putting your house on Airbnb.

 

Can I rent out my house on Airbnb?

The first thing you need to do before you consider renting out your home is to check you have all the right permissions in place.

If you’re in a leasehold property, then you should take a close look at the agreement as there could be a clause that prohibits any sub-letting.

You also need to check whether renting your home is allowed under the terms of your mortgage agreement.

Often, the terms and conditions of an owner-occupier mortgage contract say that you’re not allowed to rent out the property without your provider’s consent.

If you don’t have permission, you could be in breach of contract.

That might mean your lender can demand immediate repayment of the total outstanding mortgage balance.

It might also depend on your plans. Are you just renting out a room for short visits or do you plan to hand over your entire home?

Many lenders might allow you to take lodgers as you’re still a resident homeowner.

If you want to rent your home out but your current lender says no, you might have to remortgage with a provider who allows it. 

Metro Bank, for example, enables borrowers to rent out their homes for up to 90 days.

It also makes a difference if the property is your main residence or a second home.

Some building societies offer a mortgage for second homes and holiday lets that allows people to rent via home sharing.

 

Do I need special insurance for Airbnb?

Once you have the green light from your mortgage provider, it’s time to consider the home insurance protection you have in place. 

Assuming that your current provider will automatically cover you could be dangerous and leave you seriously out of pocket.

There’ve been nightmare stories in the newspapers where people have suffered damage thanks to unscrupulous paying guests.

One of the most famous was when two London flatmates reported a limited edition £8,000 Banksy print was stolen from their Islington home.

First, check if renting is allowed under the terms of your existing building and contents policies.

If it’s not, you could invalidate your insurance and any theft or damage claims you make might not be paid.

The Association of British Insurers (ABI) explains: 

“Your insurer will let you know about any specific conditions or changes to the policy cover... For example, theft or malicious damage may be excluded.”

If you’re not covered, you might be able to add Airbnb cover to your existing policy. 

Call your current provider and ask them whether you can bolt on cover for renting your home out.

If your insurer says no, you could shop around and switch to a provider that does allow you to let your home out.

There are several firms that offer specialist cover.

For instance, some providers offer host insurance that’s aimed at people renting out their properties on sites such as Airbnb and Homestay.

These are usually bolt-ons that can be added to the company’s home insurance policies, with buildings, contents, accidental damage and home emergency cover available.

The host insurance provides protection for paying guests in your home, usually for a set maximum of days during the policy.

Depending on the insurer you might not have to tell them every time you let the property.

There could be limitations to the cover, for instance you could be restricted to a maximum number of guests.

There might also be a maximum cash limit for claims on damage to property if things are stolen, vandalised, or broken – either maliciously or by accident.

As far as contents insurance is concerned, you need to assess what you‘re leaving in your home during the rental period as this could influence the terms of the policy.

Compare home insurance quotes

 

What types of insurance might I need?

As with standard home insurance policies, different types of policy cover different types of claim.

  • Buildings insurance provides cover for damage caused to the property itself, along with fixtures such as bathroom facilities and a fitted kitchen.
  • Contents insurance covers your personal belongings – things that aren’t a permanent part of the building. So if your furniture is stolen, that would come under your contents policy.
  • Home emergency cover offers  peace of mind if something needs fixing urgently. So if your boiler breaks down or a pipe bursts, a home emergency policy could prove useful.
  • Accidental damage insurance is an add-on to either buildings insurance, contents insurance or both. You might pay higher premiums but, as its name suggests, it means you’re  covered if things are damaged in an accident, as opposed to destroyed by fire or stolen.

 

What’s the difference between Airbnb insurance and second-home holiday insurance?

A second home or holiday home is regularly left unoccupied for long periods. Standard home insurance policies limit the number of consecutive days a property can be left unoccupied. So a second-home policy is usually more suitable for somewhere you stay only occasionally.

If you’re  an Airbnb host, it might not be a second home that you’re  renting out. The very nature of Airbnb – which often involves late-notice bookings – means you might not need a policy that covers long periods of absence from the property. This is  regardless of whether you’re  renting out a room in your main residence or using a second home as your Airbnb. 

 

What’s the difference between guest house insurance and Airbnb insurance?

Guest house insurance is a kind of business insurance that covers a broad range of scenarios.

Typical types of cover include:

Employer’s liability

Protecting your staff if they sustain injury or illness at work. This is a legal requirement if you employ people to work at your guest house.

Public and products liability

Financial protection if someone takes legal action against you for damage to their property, injuries or sickness such as food poisoning.

Loss of income

Protection against lack of earnings, for instance due to a fire or flood.

Money

Cover to protect you if personal or business money is stolen from the premises.

Guest house insurance also tends to cover:

  • Accidental damage to property
  • Malicious damage to property
  • Buildings insurance
  • Business contents
  • Key loss

Guest house insurance could also cover Airbnb properties.

So, it might be worth considering this more comprehensive cover if you’re planning to rent your home out regularly.

Airbnb insurance tends to be less broad, and lots of providers might only cover you for up to 90 days.

Some policies could say that the number of paying guests needs to be fewer than double the number of bedrooms.

For instance, if you have two bedrooms you might only have three paying guests maximum and be covered.

You usually get some cover for items in your home up to a limit, such as £5,000.

 

Does Airbnb provide its own host insurance?

Airbnb offers something called host protection insurance, which does provide you with some cover if you choose to rent out your home. 

The insurance protects you against damage of up to US $1m.

Airbnb says its Host Protection Insurance might cover:

  • Your legal responsibility for bodily injury to guests or others
  • Your legal responsibility for damage to property belonging to guests or others
  • Your legal responsibility for damage to common areas, such as building entrance halls and neighbouring properties, caused by guests or others.

However, the company says the host protection insurance does not cover:

  • Damage or injury resulting from something done intentionally
  • Loss of income
  • Damage to your place or belongings.

Airbnb also offers a Host Guarantee that gives you added protection. 

Again, there’s a US $1m limit, but this time the cover is from damages to your property or belongings.

The home renting site says that the guarantee might protect:

  • Damage to your place caused by guests
  • Damage to your belongings caused by guests
  • Damage caused by a guest's assistance animal.

The host guarantee does not protect:

  • Theft of cash and securities (e.g. savings bonds, stock certificates)
  • Damage from ordinary wear and tear
  • Bodily injury or property damage to guests or others.

You don’t have to apply for the Airbnb host protection insurance or the host guarantee. By agreeing to list a property on Airbnb, you automatically get both covers.

However, neither cover applies to hosts who offer accommodation through Airbnb Travel, hosts in mainland China, hosts in Japan, and hosts of experiences.