Airbnb Insurance 101

So, you’re listing a muti-hundred thousand – or maybe even million – dollar property for use by complete strangers on the internet. What could go wrong? A quick scroll through Reddit provides plenty of case examples. Horror stories like these just go to show how essential it is to properly protect your investment with home insurance. Yet all too many Airbnb hosts learn the lesson too late. That’s why we’re here – to teach you about the ins, outs, and advantages of getting a good policy in place before unruly guests and unexpected expenses prove them necessary. 

What Is Home Insurance?

Home insurance is a type of property insurance that provides financial protection for a home and its contents against risks such as theft, loss, or damage. It can also help cover additional living expenses if the homeowner is temporarily unable to live in the home due to an insured event. 

Generally, it covers damage or loss to the home itself, personal belongings, and liability in case of injuries or damages caused to others on the property. See a more detailed breakdown below.

Dwelling Coverage: Protection for the physical structure of the home, including attached buildings. This helps cover repair or rebuilding costs after covered losses.

Other Structures: Coverage for detached buildings on the property such as garages, sheds, or boathouses.

Personal Property: Covers belongings inside the home, like furniture, electronics, clothing, and sporting goods if damaged, destroyed, or stolen.

Liability Protection: Provides coverage if the homeowner is legally responsible for bodily injury or property damage to others, including legal defense costs.

Additional Living Expenses: Covers increased living costs if the home is uninhabitable due to an insured event, such as staying in a hotel temporarily.

Loss of Rental Income: For homeowners renting out part or all of their property, insurance may include coverage for lost rental income during repairs.

Optional Add-Ons: Additional coverages may be purchased for risks like sewer backup, floods, or earthquakes, as these are typically excluded from standard policies.

Home Insurance vs. Short-Term Rental Insurance

If you’re letting people stay in your home and paying you for it – even just occasionally – regular home insurance won’t cut it. You need specialized coverage tailored to short-term rental risks to protect yourself financially and keep your business running smoothly.

Short-term rental insurance is specifically designed to cover the unique risks of renting your home to paying guests for short periods. Policies protect against damage, theft, liability claims, and even lost rental income affecting or caused by Airbnb guests. 

Top Short-Term Rental Insurance Providers In Canada

Just like with any other type of insurance, the value you get from this kind depends heavily on who you choose to get it from. Short-term rental insurance providers in Canada offer a broad and robust suite of coverage options. You’ll find policies covering everything from risks like property damage and theft to liability and business interruption. Here’s a summary of five well-known companies and their respective offerings:

Aligned Insurance 

Aligned Insurance is a 100% Canadian-owned brokerage specializing in tailored short-term rental coverage for owners across the country, including condos, homes, cottages, and Airbnbs. It offers protection for property damage, vandalism, theft during rental periods, water/sewer backup options, and rental value coverage up to 10% of property value. Their expertise includes matching coverage to individual property details and historic claims.

• 100% Canadian-owned brokerage
• Covers property damage, theft, vandalism
• Optional water/sewer backup coverage
• Rental value coverage up to 10%
• Tailored policies by property type and claims history

Aviva Insurance

Aviva is one of the largest insurers in Canada and provides specific short-term rental insurance, including “home sharing” or “Airbnb” policies. Their coverage is designed for rental activity and protects against third-party liability, personal property damages, and often includes loss of rental income. Aviva policies can often be added as endorsements to existing homeowner policies for seamless protection.

• Major Canadian insurer with home-sharing policies
• Covers third-party liability and property damage
• Includes rental income loss protection
• Easily added to existing homeowner policies

Wawanesa 

Wawanesa is a leading provider with dedicated short-term rental coverage focused on theft, attempted theft, and tenant vandalism. Their policies are designed to cover property owners who rent homes, cottages, or secondary properties for short stays. Wawanesa also offers coverage for personal liability and losses due to business interruption.

• Covers theft, attempted theft, and vandalism by tenants/guests
• Protection for personal liability
• Covers business interruption losses
• Suitable for homes, cottages, and seasonal properties

Duuo

Duuo, underwritten by the Co-operators, offers specialized insurance solutions for short-term rental hosts using platforms like Airbnb and VRBO. Their policies typically cover guest-caused property damage, liability, and lost income during repairs. Unlike standard homeowner coverage, Duuo’s products are tailored for sharing economy businesses and can be secured entirely online.

• Designed for sharing economy hosts (Airbnb, VRBO)
• Covers guest-caused damages and liability
• Covers loss of rental income during repairs
• Online application and management

Square One

Square One provides flexible and customizable short-term rental insurance policies, allowing hosts to set coverage amounts and select add-ons. Their products feature loss of rental income protection, liability insurance for guest injuries, and coverage against theft or accidental damage caused by renters. Square One is often recommended for its affordability and straightforward online application process.

• Flexible, customizable insurance policies
• Coverage for loss of rental income and liability
• Includes theft and accidental damage caused by renters
• Affordable with easy online application

Do You Really Need Short-Term Rental Insurance?

Airbnb margins are tight as it is. The market in Toronto is exceptionally competitive. For most investors, profitability rests solely on month-to-month operating costs. So it's easy to understand why you might be hesitant to add an expense like home insurance onto yours.

Imagine this: you’ve just had a busy month bringing in close to $4,000 in bookings. Then a guest leaves your place with a broken window and floods the hardwood floors. Without the right insurance, now you’re staring down a bill for repairs that could completely burn up weeks of rental income. Liability costs can be even crazier; what if someone slips on your stairs and ends up in the hospital? Short-term rental insurance steps in to cover claims without predictable cause or control, sometimes making or breaking the long-term profitability of short-term rentals.  

Given the competitive nature of Toronto’s market and typical earnings, many savvy investors see short-term rental insurance as a vital component of responsible property management—an expense that protects their revenue stream and asset value over time. We don’t promote any single provider but rather emphasize looking into potential options more broadly. Insurance is one of those things you can only truly appreciate the value of because it's proven necessary. Hopefully this article did a good enough job of doing that.

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