Short term rental and Airbnb insurance

With the short stay economy booming in Australia, it’s important for hosts, including Airbnb hosts, to have a suitable level of short term rental insurance.

A short term rental can be a great opportunity for a relaxing getaway, and if you’re a property-owner, then renting a space out on a platform like Airbnb or Stayz can be an additional source of income. If you’re planning on listing a room or a whole property in this way, though, then it’s important to make sure you’re covered with the right kind of insurance. Here, we discuss your options for short term rental insurance in Australia, and consider the best Airbnb insurance.

What is short stay accommodation?

Short stays are a form of rental accommodation that is rented out for a short period of time – these kinds of properties are typically rented out privately by the owner, often on platforms like Airbnb or Stayz. Short stays are sometimes seen as an alternative to hotels, and generally comprise fully-furnished apartments or houses, or rooms within a private dwelling.

According to the Real Estate Institute of Australia, the short stay accommodation market is booming in Australia. Their 2023 report into the industry there are a total of 133,960 short stay accommodation places currently on the market in the country, representing an increase of 22.8% over the previous year.

If you have a property that you are looking to rent out in this way, then there are several important things to keep in mind. You will need to make sure you comply with any local rules and regulations about short stay properties, and you will also need appropriate insurance, to protect you from loss or damage.

What are the options for short-term rental insurance?

When it comes to home insurance for your Airbnb, Stayz or other short stay accommodation property, there are several options that might be suitable. The three main ones to consider are:

1. Short term rental insurance: Some providers offer insurance specifically tailored for short term rentals. This type of coverage can be tailored to your specific situation, and can cover a whole house or apartment, or just a room, depending on how much of the property you’re renting out. Depending on your needs and the provider, you may be able to take out cover for a specific number of nights, or if you want to be insured for a longer period, you may also have the option to choose six or 12 months.
2. Landlord insurance: Some landlord insurance policies may provide cover for short stays, although it’s worth researching the policy carefully before signing up, as this cover might be limited. Those providers that do cover short stays through landlord insurance may exclude cover for such things as theft or burglary from guests, loss of rental income, and costs associated with recovering unpaid rent.
3. AirCover for Hosts: AirCover for Hosts is a specific type of insurance that is offered by Airbnb, for hosts that use its platform. Per the Airbnb website, it includes $3M USD in cover for damage done by guests to your property and belongings, and $1M USD liability insurance for guests, in the event that they are hurt or their belongings are damaged or destroyed.

Stayz offers some limited protection for hosts, including $1M in liability insurance, but if you are renting out a property on this platform, then consider a suitable short stay or landlord insurance policy.

What does short-term rental insurance cover?

Short-term rental insurance covers you for loss or damage to properties that are rented out for short periods of time, such as holiday rentals and airbnb properties. It can cover both the building and contents, and depending on the policy, it can cover for things including:

• Accidental guest damage
• Death of a guest
• Fire damage
• Legal liability
• Loss of rent
• Malicious guest damage
• Natural disasters
• Pet damage
• Tax audits
• Water damage

Depending on the provider or cover, there may be an excess payable on some claims.

Some short-term rental insurance providers will allow you to take out cover per night, and will allow you to nominate how many nights of the year you want your property to be insured – this may be between one and 90 nights.

You may also be able to choose cover that lasts for a period of six or 12 months, and have the option of an unlimited number of bookings in that time period. The length of time you can be covered for, though, will depend on the provider.

What does Airbnb insurance cover?

AirCover for Hosts is a specific kind of insurance that is offered by the Airbnb platform for its hosts. Airbnb says that AirCover is free for its hosts and aways included, and its features include:

• Guest identity verification
• Reservation screening, to block high-risk bookings
• $3M USD damage protection, with special protection for damage to art and valuables, cars and boats stored at your premises, damage done by guests’ pets, deep cleaning and income loss due to bookings you have to cancel
• $1M USD liability insurance for guests in the event they are injured or their property is damaged or stolen
• A 24-hour safety line for hosts

Airbnb cautions that, while AirCover for Hosts protects you while you are hosting an Airbnb stay, it is not a substitute for personal insurance. Therefore, if you are seeing the best airbnb insurance for Australia, it may be worthwhile to consider another overlapping policy of landlord insurance or short stay insurance, depending on your needs.

Does regular home insurance cover short term rentals?

Generally speaking, your standard home and contents insurance policy will not cover you for paying guests in your home, although there can be some exceptions if you are renting out a single room in your property, and not the entire home .

According to the Insurance Council of Australia, home insurance providers tend to regard short-term holiday rental of an entire property as business activity, so in this situation, you are unlikely to be covered, and will potentially be vulnerable to financial loss.

There can be some exceptions if you are just renting out a single room in your home on a short stay platform. According to Obie Insurance, if you occasionally rent out a single room in your home in this way, your standard insurance may offer some coverage.

Obie insurance points out, however, that this is only likely to apply if you rent out a room infrequently, and if you do it on a regular basis, it’s likely that you’ll need to look into landlord insurance or some other arrangement  to make sure you’re properly covered.

Why is landlord insurance important?

Renting a part of or all of your home is not usually a scenario covered by ordinary home and contents insurance and can even void your policy in some cases, because it is considered a commercial use of the property rather than private use.

If you’re renting out all or part of your property as a short stay, and you’re not covered, you could face an extensive repair bill if a renter damages your property. Even worse, you could face an expensive public liability claim if a renter is injured while staying on your property, which could mean a significant amount of money.

If you aren’t sure about what’s covered under a policy you hold and you’re considering turning your property into a short stay, it is advisable to contact your insurer and check your coverage, and if necessary, take out a new, appropriate policy to cover yourself.

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