Hosting a private residence on platforms such as Airbnb has become a common way to supplement income or become a main source of needed income. Some folks purchase properties specifically for the purpose of creating short-term rentals.
But when registering your property on Airbnb, is your property really protected if damage should occur?
The first step in becoming an Airbnb Host is to agree to their “Terms of Service, Payments Terms of Service, Privacy Policy, Nondiscrimination Policy, Extenuating Circumstances Policy, ‘and some of our other terms and policies.’” Under these various terms and policies, a host is required to give up certain rights and accept certain responsibilities without even knowing what they are giving up. The host is also agreeing to be bound to Airbnb’s claim handling procedures.
Airbnb assures hosts that their property will be safe because the renters are pre-screened by Airbnb. Additionally, Airbnb assures hosts that any damage will be covered under the Airbnb “Host Guarantee Program” or “Host Protection Insurance.”
“Host Guarantee Program”
In a typical property damage claim scenario, a claims adjuster is looking to fulfill the promises that the insurance company made to an insured under the terms of an insurance policy to return the insured to pre-loss condition. The only promise that Airbnb’s Host Guarantee Program contains is that they have a Host Guarantee Program. There is no promise that a host will be able to recover for damages and be made whole under the Host Guarantee Program.
The Airbnb “Host Guarantee Program” is to help hosts recover for damages that happen to their property by Airbnb renters. Even though Airbnb refers to the “Host Protection Insurance policy,” this protection program is not an insurance policy. The program is more of a self-insurance program offered by Airbnb and is not backed by an insurance carrier. Because the program is not backed by an insurance carrier, the program is not regulated by the Minnesota Department of Commerce and Airbnb is not held to the same claim handling requirements as an insurance carrier. Airbnb is able to create their own claim handling process without any recourse by a host and incurs no obligation to pay any claims.
In the event that a host files a claim under the Host Guarantee Program, the first step after requesting reimbursement for damages from Airbnb’s “Resolution Center” is to complete an intake form online. The host will then be contacted by an Airbnb employee by email and the host will be required to complete a “Contents Worksheet” and provide “original (emphasis added) purchase receipts/credit card statements for items being claimed.” The email further states: “Please note that if receipts are not provided, the items may not be considered for payment.” Most likely, a host has not retained the original receipts so their property content claim will most likely be denied.
Even if a host does have the required purchase information, Airbnb may require repair or cleaning instead of replacement of the item. The host bears the burden of proving that repairs or cleaning would be unsuccessful. Further, Airbnb is able to selectively depreciate any item in any amount solely at their discretion.
If the claim progresses with Airbnb, a third-party insurance adjuster may be hired to inspect the damages. After the adjuster has completed their inspection and submitted their estimate to Airbnb, the host must sign the “Host Guarantee Payment Request Form” before Airbnb presents a settlement offer. Even if an independent insurance adjuster is not used, the host must still sign the Host Guarantee Payment Request within 30 days after a loss has occurred whether the claim is finalized or not.
Under the Host Guarantee Payment Request that the host is required to sign, the host agrees to accept the settlement amount before they know what that offer will be.
“Host Protection Insurance”
Airbnb offers additional protection under “Host Protection Insurance” which protects hosts from liability claims brought against a host. This program is also backed by Airbnb or Airbnb does not disclose the name of the insurance company who covers losses claimed under this program. As with the Host Guarantee Program, claim handling is at Airbnb’s discretion without any state regulatory protection for a host.
Homeowner’s own insurance
Unless a host has purchased an insurance policy for a business, a host may not be able to pursue a claim under their own homeowner’s policy. Most personal insurance policies contain an exclusion for business use. Renting the home for profit may be considered business use by the carrier.
If a host wants to pursue action against Airbnb, the road to recovery will be long and bumpy. Airbnb has an arbitration clause that hosts agree to when signing up for Airbnb. The host agrees to arbitrate in San Francisco where Airbnb is headquartered. Widespread use of Zoom may make attending arbitration in another state less of a deterrent than pre-COVID days. Most Airbnb claims are expensive to litigate (likely in federal court) so a host will not be able to easily or quickly recover any damages.
Becoming an Airbnb host can be very profitable as long as the host understands what protections are available to them and how to find alternative ways to protect their property.
If you are an Airbnb host who has experienced issues handling damage claims to your property, PG Law offers consulting services to help you navigate your options and find a path towards a better settlement process. If you have any questions, please visit our website at www.pglaw-mn.com and complete an intake form. You may also reach us by email at pglawmn@gmail.com or by phone at (612) 404-6874.
**The information contained in this article is taken directly from Airbnb’s website and from prior Airbnb claim handling experience.