Airbnb.com Insurance Issues
When it comes to Airbnb, a lot of people worry about damages to their property. While property damage could cost a few thousand, (side note: Airbnb.com has a "host guarantee" to cover property damage), the real issue we should consider when renting isn't property damage at all, it's liability. A guest who injures themselves on your property could cost you far more than any property damage, even above the value of your house.
When living at your house, if you or someone visiting damages something or injures themselves, your homeowner's insurance policy will cover it.
When renting your house out traditionally, if someone damages something, or if someone renting the home or a guest gets injured on the property, your landlord's insurance policy will cover it.
Now, how about with Airbnb? Once you accept money for the short-term (under 28 days) use of your house, you are no longer covered by either type of policy. So, if a paying guest damages something or injures themselves, what do you do? If you own the home and the injury is serious enough, you could be facing a very expensive lawsuit to cover the medical expenses of the injured person.
If you don't own the home, as in you're a renter illegally sub-letting your apartment on Airbnb.com, God help you. I can't even imagine how bad that could get! I would think you'd be sued by your landlord, AND the injured guest.
Some people have an "umbrella" policy, which covers personal liability above the limit of regular insurance. If you have this type of insurance, you might start feeling safe right about now. DON'T. I had an umbrella policy too and discovered that it was personal, not commercial. The Airbnb.com guest-host relationship is a commercial one. Your extra umbrella policy would be useless in the case of an Airbnb.com claim.
There is a third type of policy, sort of like a hotel or bed and breakfast policy that CBIZ offers which would cover damage and injury in the case of short-term guests. This is what I recommend after my many hours of research over the Summer.
Now that we've covered guests. How about workers in your home?
If you hire a worker to do repairs in your home, that worker (or the company employing the worker) should have worker's comp insurance. This would come into play if the worker got injured on the job at your house and was unable to make a living because of it. For example, a house cleaner slips on the stairs in your house while doing paid work. He hits his head and isn't able to earn money until he heals. Worker's Comp would compensate him for this.
How many times have you asked to see proof of a repairman's Workers' Comp policy? I know I had never done it, yet I'd had countless workers (not from a company) repairing things in my house. People don't have it for the usual reasons: they don't think anything that bad will happen to them, and it's expensive to carry additional insurance.
This goes for anyone doing paid work in your house. If you pay your neighbor to paint a room, it's the same situation. Be careful!
Now, how does this relate to Airbnb.com?
We have an amazing house cleaner/manager who helps us manage all the cleaning and things that need to be done to make this all happen. She didn't have Worker's Comp. After lots of worry and research and trying to get around the fact that she IS an employee, I figured out three things:
1. If you hire someone to work in your house repeatedly, that person is probably an employee.
2. If you have an employee, you need to get him or her Worker's Comp. It costs me $81 per month, but it's worth it just in case.
3. If you hire someone who isn't an employee to do contract work (like a repair) you must get proof of their insurance. If they don't have it, be aware of the type of risk you're entering into.
So, as I've come to understand, after weeks of research and worrying, insurance is absolutely necessary when you can't or don't want to afford the worst case scenario. When it comes to liability, the risk isn't worth it!