Landlord insurance and Airbnb: What hosts need to know

At the time of writing (late July 2023), despite the rain and grey skies, we’re officially in summer holiday season. This is peak time for people wanting to rent out either a room or a whole property through Airbnb or other property rental providers.

As attractive and potentially lucrative as this letting opportunity is (aside from the rental, there is £7,500 tax-free earning potential per year), there are some key considerations that owners/landlords should be aware of before inviting in visitors in terms of mitigating against loss, damage, or theft.

The first thing worth mentioning is the Airbnb Host Guarantee. While taking this out suggests hosts are covered to approximately £740,000 in the event of damage caused by guests, there are a number of notable exclusions, which may come as a bit of a surprise. In short, you WON’T be covered for:

• Loss or theft of cash or securities, jewellery, artwork, or collectors’ items

• Injury to or the loss or death of any domestic pets

• Your liabilities as the owner and landlord of the property (the risk of claims alleging your responsibility for any injury to your guests and their visitors or damage to their property)

And just to illustrate how serious the implications of this could be, may we remind you of when a Banksy worth £8,000 was stolen from an AirBnB rental? And just to add insult to injury, the flat owners also returned to discover a trashing of the place, with the three C’s – laughing gas canisters, condom wrappers, and cannabis joint ends strewn around the place. And that clean-up operation was all down to the property owners, which was the last thing they needed after the Bansky burglary.

While Airbnb and other home rental businesses are very clear that a guarantee is simply that and not an insurance policy, there are still many who believe this is enough cover for the most common eventualities. But with renting out one’s home is becoming increasingly popular, at Protect My Let we’d advise on the most robust and comprehensive Landlord cover.

And we’ll be honest, insurance cover for renting out all or part of your property can be problematic as there is naturally a higher risk of damage and theft when there is a regular stream of visitors.

Even before looking at what is and isn’t covered, please take note: the very act of renting out your home could invalidate the home insurance and contents policy that you already have.

On a similar subject, we also advise that before you get too far into your rental ambitions, if you have a mortgage, you contact your advisor to ensure the terms of your mortgage allow you to rent your home or a room out. Most are fine with this but will require a fee. Ignore this step at your own peril; if something does happen without a formal arrangement in place, this could also invalidate any insurance cover.

One last thing before you get to the insurance policy stage, do your research on a few different rental schemes – not just Airbnb. TripAdvisor and RentAway are two more similar companies to look at. It’s also worth checking our reviews from the letting community so you can be very sure you’re going with the right one for you.

So now you know what needs to be done in advance, it’s time to arrange that cover. Speak to your current home insurance provider who will at the very least either give you a quote or truthfully tell you whether your venture may invalidate your policy, or leave you underinsured if something untoward were to occur. However, they may not always perform that forensic deep dive into those grey area sub-clauses like someone stealing a painting or cracking the new ceramic kitchen floor tiles.

It’s therefore much wiser to engage with a property rental insurance specialist from the very start of your holiday rental venture. Not only will they tailor a quote specifically to fit you and your property, but a good broker – and the insurance company they pair you with – will leave no exclusion stone unturned or not discussed.