Strangers staying at your rental property with nothing more than a credit card and some basic profile information. As seen in our Airbnb horror stories, that’s the opening line to many disasters.
Luckily, Airbnb has a protection plan for those who want to quell the costs of uncertainty. It's called AirCover, and in today's article, we'll explain what it is, how it works, and what all hosts should know about rental property insurance.
The Inherent Risk of Airbnb
Risk is an unavoidable aspect of operating a short-term rental. People seek such accommodations out for a variety of things, from vacations to temporary relocations. Most are well-intended, but even guests with great track records can create chaos. In lots of cases, you never even meet them face-to-face.
Some might even argue partial anonymity emboldens carelessness. If you don't know someone personally, it's easy to treat their place and things as disposable. The best any host can do is review prospective guests' profiles for prior misbehavior and red flags. Then, it's a matter of having a plan in place should things go wrong.
What Is Airbnb AirCover?
Airbnb AirCover is a program designed to safeguard your property and provide financial security against the uncertainties of short-term rentals. The built-in protection plan covers a wide range of scenarios so hosts can focus on providing excellent hospitality rather than constantly worrying about potential financial losses from guest-related incidents.
What Does AirCover Include?
So, what does AirCover actually cover? The legal terms mention several potential causes of damage and loss, most notably the following.
Property Damage Protection: The core of AirCover is its $3M USD damage protection, which covers damage to your home and belongings when guests don't pay for it themselves. This includes specialized protections for:
- Art and valuables that guests may damage
- Vehicles and watercraft stored at your property
- Pet-related damage caused by guests' animals
- Deep cleaning costs for removing stains and odors
- Lost income if you need to cancel bookings due to guest-caused damage
General Liability Insurance: The $1M USD liability insurance protects you in rare but serious situations where a guest gets injured or their belongings are damaged or stolen on your property.
Safety-Related Support: A 24-Hour Safety Line provides immediate access to specially trained agents if you ever feel unsafe, extending protection beyond just property damage to your personal security.
What AirCover Doesn't Protect You From
The idea of rental insurance sounds great on paper. But anyone who's taken out any sort of policy knows not all plans are made equal. Whether for a home, car, or someone's life, insurers tend to disappoint when coverage is actually needed. Consider AirCover to be no different. While relatively robust, there are several gaps in protection hosts should be aware of.
Currency and Cash: AirCover does not cover loss of currency or cash left in your property. If a guest steals money or you experience theft of cash during a stay, you won't be reimbursed. This is an important distinction; while valuables like art and jewelry are covered, liquid assets are not.
Normal Wear and Tear: Like most insurance policies, AirCover distinguishes between damage and normal wear and tear. Faded paint, worn carpeting, minor scuffs, and other signs of regular use are not covered. This means you'll need to budget for routine maintenance and refresh costs separately.
Acts of Nature: Natural disasters such as earthquakes, hurricanes, floods, and severe storms fall outside AirCover's protection. If your property sustains damage from these events, you'll need separate homeowners or landlord insurance to cover losses. This is a critical gap for hosts in disaster-prone regions.
Vehicle and Watercraft Limitations: While AirCover does cover damage to cars and boats, this protection only applies to vehicles that are parked or stored at your property. If a guest damages a vehicle while driving it, or if damage occurs away from your home, you won't be covered.
Standard Checkout Cleaning: AirCover reimburses deep cleaning costs for stains and odors caused by guest behavior, but it does not cover routine checkout cleaning tasks like laundry, dishes, or trash removal. These are considered normal turnover expenses that hosts should expect to manage independently.
How Much Does Airbnb AirCover Cost?
Peace of mind is priceless. On Airbnb, it's free. The AirCover program is included in all stays as standard. That means you don't have to apply or make extra payments for coverage. Third-party Airbnb insurance, however, comes with costs. If seeking protection beyond what Airbnb offers, be prepared to pay premiums. Specific rates vary depending on your property type, location, number of bedrooms, rental frequency, and the coverage limits and deductibles you select.
A luxury beachfront villa in a hurricane-prone area will command significantly higher premiums than a modest apartment in a low-risk urban neighborhood. Similarly, properties rented frequently throughout the year typically face higher premiums than those with seasonal or occasional bookings. The coverage limits you choose – whether you want $500K, $1M, or $2M in protection – and your deductible amount will also directly impact your costs.
Is Getting Third-Party Airbnb Insurance Worth It?
With professional cleaning, furniture purchases, property management software, and tons of other expenses to worry about, it's natural to negate the need for additional short-term rental insurance. And sometimes, saving some money on extra premiums isthe smartest move. But as we've established, there are plenty of situations where having an extra layer of protection in place proves worthwhile.
The key is finding the right balance between protection and cost based on your specific situation and risk tolerance.
When evaluating whether third-party insurance makes financial sense, weigh the annual premium against your property's replacement value and your rental income. If your property is worth $500K and generates $50K annually in revenue, the cost of comprehensive coverage becomes a reasonable business expense. Conversely, if you're renting out a modest space with lower income potential, the premium might outweigh the benefit.
How to Mitigate Risk With or Without AirCover
Forethought and good judgment, like Airbnb AirCover, are free. You can minimize your overall risk as a short-term rental operator so insurance doesn't have to be used in the first place by following these best practices:
Set Strong Policies
Do you have an Airbnb pet policy? What about an Airbnb party policy? They're just rules at the end of the day, but stating them outright is worth it in the long run. That's true regardless of whether you've opted for AirCover. Any lawyer will tell you to get things in writing when entering into any kind of agreement. If a guest were to cause damage, additional costs, or any problems beyond what was initially bargained, policies can be used as a reference for their breach of trust and help justify compensation.
Document Your Property Thoroughly
Take high-quality photos and videos of every room, closet, appliance, and outdoor area before your first guest arrives. Document the condition of furniture, walls, flooring, and any existing wear and tear so you have clear evidence of what the property looked like before each booking. This visual record is invaluable if a guest causes damage by proving what was pre-existing versus what occurred during their stay.
Screen Guests and Communicate Proactively
Review guest profiles carefully, checking their review history and looking for any red flags before accepting bookings. Send a friendly welcome message to confirmed guests that reiterates your house rules, check-in procedures, and expectations around noise, parties, and pet policies. Early communication sets the tone for the stay and gives you a chance to assess whether a guest seems responsible and respectful – allowing you to cancel questionable bookings before problems start.
From check-in to check-out, Airbnb AirCover provides invaluable protection that addresses many of the risks inherent to short-term rentals, but it's not a complete solution on its own. Thinking negatively can actually be a good thing because it prepares you for bad scenarios before they happen. Take AirCover for peace of mind without discounting the additional benefits of acquiring a little bit of extra protection.
