Top 3 Airbnb Insurance Claims Every Host Must Know

Welcome to Invest Smart with Steadily. I'm CJ Long, the director of claims at Steadily, and today we're going to talk about three things you need to know about short-term rental claims.

There's a misconception out there that theft or vandalism claims are far more likely to happen on a short-term rental than, let's say, a long-term rental. And while it may be true that those claim types do pop up more frequently, your property is still more likely to experience a weather-related or water damage claim.

On the weather or water damage front, hail and wind storms are often the most predominant, but wind can be anything from a tornado ripping off some shingles, knocking down a tree. And on the water damage side, you could see a lot of burst pipes or roof leaks. It's key in these situations that you take action to mitigate your damages. Most policies are going to cover reasonable emergency measures taken to prevent future losses. Make sure you have a tarp on the roof to prevent water damage or get that tree removed to prevent further structural damage. It's really critical to do this. Failure to mitigate damage could lead to damages not being covered. Take photos, retain invoices on any of the work you have done. And in these situations on short-term rentals where a lot of you may live out of the area, good communication with your property managers is critical.

Next up, let's talk about personal property. In most cases, short-term landlords have fully furnished the property that their short-term tenants are staying in. It's important for you to understand the difference between damage types and how various coverages may or may not apply.

When it comes to short-term rental claims, there are three types of ways that your personal property may get damaged that often become confusing. The first is vandalism or malicious mischief. The second is accidental damage. And the third is wear and tear. All result in property being damaged, but the actual application of these is vastly different.

For vandalism and malicious mischief, these are things that would be reported to law enforcement — instances where somebody has caused intentional damage to your property. In most cases, vandalism or malicious mischief is often covered by your base dwelling policy.

Accidental damage is a little bit different. This is wine getting spilled on the couch. This is a tenant roughhousing and a lamp getting knocked over and broken. This is different than the intentional crime we're talking about with vandalism. In a lot of cases, the base dwelling policy may not cover accidental damage, or if it does, it's often a singular event and the falling item falls below the deductible. It's important for you as the landlord to look into different insurance coverages that may be out there from, let's say, the host platforms — Airbnb, Vrbo, etc. — to make sure that you have coverage in the event that accidental damage occurs.

The third type is wear and tear. Wear and tear is different than accidental damage, vandalism, or malicious mischief. Over time in short-term rentals, wear and tear is going to happen. Door hinges are going to get loose. Baseboards are going to get dinged. That's not something that you'd generally be able to file a claim for. It's still important that you take care of these from a general maintenance standpoint, and it's critical that you keep a fund for expenditures like this.

Finally, if someone's injured on your property, you could be legally liable even if you weren't there. We just talked about the importance of maintenance — property condition matters. It's important for you to keep your property safe, free from hazards, and well maintained. If a tenant falls on a crack or is injured due to a lack of maintenance, you could be held liable and be responsible for their injuries, pain, and suffering.

Bikes, kayaks, horseshoes — these are all fantastic amenities to have at your property as a short-term landlord, but you need to be cognizant of the liability risk that these items also bring. Make sure that you have liability coverage to protect you and your assets from that risk.

Thanks for tuning in to Invest Smart with Steadily. If you found this episode helpful, make sure to subscribe for more insights on how to protect and grow your real estate investments. If you've got any questions, drop them in the comments below or reach out to us at steadily.com.