Protecting Your Airbnb Cottage Rental with Insurance
Renting out your cottage on Airbnb requires specific insurance coverage to protect your property and to protect yourself from legal liability.
While Airbnb Host Protection insurance is automatically applied to all Airbnb hosts, you need to consider additional insurance coverage as a cottage owner to protect yourself against the unique risks you face as a short-term rental host.
Here’s what you need to consider to be fully protected as the owner of an Airbnb cottage rental:
1 Homeowners insurance usually doesn’t have enough coverage: Your existing homeowners insurance may not cover short-term rentals. Inform your insurance provider about your Airbnb rental and ask about additional coverage options.
Your insurer should know that you are listing your cottage on Airbnb or you can risk having your home insurance policy voided for breach of contract.
2 Short-term rental insurance: Some insurers offer specific coverage for short-term rentals, providing protection for the property, contents, and liability.
3 Commercial general liability (CGL) insurance: Liability coverage is essential to protect you if a guest is injured on your cottage property or if their property is damaged during their stay. It’s also known as “slip-and-fall” insurance because it protects against claims alleging third-party bodily injuries, such as an Airbnb guest slipping and falling and is injured.
CGL may provide financial coverage for third-party medical expenses and your legal fees if you are sued. This type of insurance can also help protect you against third-party property damage, false advertising, and libel or slander.
Note that with Airbnb, host liability insurance provides Airbnb hosts with $1 million US in coverage should you be found legally responsible for a guest getting hurt or their belongings being damaged or stolen while they’re staying at your short-term rental. Lawsuits, legal fees, and awards can exceed that limit these days.
4 Contents insurance: This covers your personal belongings in the cottage, such as furniture, appliances, and other items, in case of theft or damage.
5 Business interruption insurance: This coverage can compensate you for lost income if your cottage becomes uninhabitable due to a covered loss, such as a fire or storm damage.
6 Commercial property insurance
It protects your short-term cottage rental against physical losses or damages and its contents due to fire, theft, or vandalism. It typically includes coverage for the property’s physical assets such as your rental’s furniture and contents and as well as any electronics that are stolen or damaged.
It can also protect damages to the rental property caused by a guest, such as accidental spills or damage to the furniture, walls, or floors.
7 Rental income
This type of coverage provides you with protection if you lose rental income due to damages to your property because of a fire, flood, or other insured perils.
Why should I get more insurance if Airbnb provides coverage?
When you rent out your cottage on Airbnb, it affects the coverage you need and the level of risk the insurance company is taking on. While Airbnb provides some protection, there are some gaps in coverage for which you would be responsible.
For example, you would have to keep paying the mortgage and taxes without any short-term rental income.
