As Bay Area residents prepared for thousands of football fans and media to descend on their region for the Super Bowl, one began to hear the sorts of rumblings that typically precede big events. Traffic will be terrible. Parking will be worse. Good luck getting a table at a restaurant. Oh, and good luck finding a place a sleep if you’re from out of town.

Former Mayor Willie Brown had advice for the naysayers: Rent your house on Airbnb! “Everyone is going to make a killing, including the private citizens who are smart enough to schedule a vacation paid for by Airbnb’ing their homes.”

The Super Bowl may not be the sharing economy windfall that Willie promised. But that doesn’t mean Airbnb hasn’t made its mark in the Bay Area. From folks renting out in-law units as a way to keep pace with skyrocketing cost of living, to wealthy residents who spend months in Europe or Vail, short term rentals have become a way of life in most destination cities, including San Francisco.

While the broader policy discussion of the pros and cons of short term rentals often focuses on the impact this new market has on neighbors and communities, the focus for hosts and potential hosts is much more immediate: What risks do I run by having strangers pay to stay in my home, and do I have insurance for them?
Closing the insurance gap

Most typical homeowners and renters insurance policies exclude coverage for commercial use. As a result, a host’s personal insurance probably won’t pay for property damaged by a renter (i.e. first party coverage), or for damages suffered by a renter or third party allegedly caused by the host while hosting (i.e. third party coverage).

It has long been part of Airbnb’s business model to provide some measure of first party property protection. With their “host guarantee,” which provides up to $1,000,000 to replace damaged property, Airbnb has succeeded in assuaging many hosts’ concerns that guests will destroy their homes.

Until recently, however, Airbnb did not protect hosts if guests were injured on their property. If a guest damaged a host’s expensive treadmill, the host might be able to get it replaced by Airbnb. But if the guest fell off the treadmill and broke a leg, the host was out of luck.

That was the case until 2014, when Airbnb first introduced its “host protection” insurance program. The program provided $1,000,000 worth of liability coverage for hosts, but the precise extent of the coverage was unclear. Hosts who asked for a copy of the policy were often directed to marketing materials. Observers suggested that it wouldn’t afford coverage unless the host had her own insurance that covered the loss. This observation ran contrary to Airbnb’s online materials, which stated that the coverage would pay first dollar if the host’s own insurance did not apply. But without making the actual policies available, hosts were left unsure of their coverage.

Airbnb appeared to address this issue in October 2015, when it expanded its host protection program. Airbnb’s materials now explicitly state that its liability coverage is primary, and that its policies are written on general commercial liability forms. The policies still aren’t available online, but hosts with questions about coverage are invited to contact the company. If I were an Airbnb host, the new program would make me feel better about the risks I was undertaking.

Making sure you’re protected

But I would still check my own insurance. Airbnb has always advised its hosts to make sure they have their own insurance coverage, and hosts should take this admonition seriously. The most important first step is to ensure that you don’t void your existing insurance by hosting without telling your insurer. Check your policy, and never lie on an insurance application. In some cases, you could lose all coverage, even for damage or liability that has nothing to do with hosting. The next step is to see if your insurance actually covers risks associated with hosting. If it doesn’t (and it probably won’t), consider purchasing a new policy or a rider to your existing policy that does. You’ll always be safer having your own insurance, rather than depending solely on a policy from Airbnb. Finally, consider obtaining umbrella coverage that will respond to host-related risks. One million dollars sounds like a lot of coverage, but those limits can exhaust quickly if a young and healthy guest with a lifetime of future earnings ahead of her gets injured in your home.

One of the benefits of the rapid spread of the sharing economy is that insurers are responding to the new needs of the market. The old guard as well as some new players are rushing to provide insurance products targeted to the short term rental market. Most hosts, particularly those that own their homes, would be well advised to take advantage.