Slice Insurance started life as a software development company based in New York. Their tech background is evident in their insurance solution. They are the most innovative company in the insurance business, in the United States at least.

Sharing economy = higher risks

All insurance companies agree that hosting paying guests on a frequent basis represents a significantly higher risk profile than the typical home insurance situation where guests are infrequent and known to the homeowner. This is why most insurance companies exclude coverage for paying guests on their home insurance policies.

Airbnb hosts renting space in their primary residences are not running hotels or guest houses where guests are expected at all times. It’s not what most people would call a hospitality business, it’s a home where the homeowner makes some extra cash renting out unused space. It doesn’t merit the need for a commercial insurance policy nor does it fit the definition of an investment property used for vacation rentals. It’s somewhere in between, a mix of home, small business, and vacation home.

Slice vs the “not-so-innovative” traditional home insurance companies

Traditional home insurance companies have not yet figured out a solution for this problem. So what they do is rely on the business exclusion of their homeowners policies to deny coverage. Some, like State Farm Insurance, go a step further and cancel their customers’ policies if they discover that they’re renting rooms, or their entire homes, on Airbnb and VRBO.

This is where Slice comes in. The team at Slice has developed a unique short-term rental insurance solution specifically for people listing their primary residence on Airbnb. It’s on-demand insurance that steps in where home insurance fails, and provides homeowners with the protection they need while hosting Airbnb and VRBO guests.

The Slice Insurance Solution for Airbnb and VRBO Hosts

Slice Insurance is a new venture-funded company that is licensed to do business in all 50 states. While the company is new, their backers are well-established insurance businesses. Insurance policies are underwritten by Great Lakes Insurance, a subsidiary of one of the world’s largest reinsurance companies, Munich RE.

Slice’s policy is a modified commercial insurance policy, a business policy adapted for the specific purpose of insuring short-term rentals, or “homeshare business” as Slice calls it. Slice uses several definitions that you would not find in any traditional insurance policy. It’s what makes this policy unique, it’s written for the specific purpose of covering short-term rentals in primary residences.

Homeshare Business
“Homeshare Business means renting the Business Premises to a Renter through participation in a Sharing Network Company for a specified Rental Period.”

Sharing Network Company
“Sharing Network Company means any organization that facilitates a Homeshare Business, or provides services to a Homeshare Business, through an electronic platform or application.”

Rental Period
“Rental Period means the period of time, expressed as full calendar days, that the Business Premises is rented to and occupied by a Renter.”

Renter
“Renter means an individual who rents the Business Premises for specified Rental Period, and arranges the rental through:
a. A Sharing Network Company;
b. A smartphone application operated by Slice Labs Inc.; or
c. The Slice Labs Inc. website.”

Coverage Summary

Section I – Property

The Slice insurance policy automatically covers property damage losses at replacement cost valuation. This means that any losses you suffer to your property, or personal possessions, are covered at the cost it would take to replace them. Most insurance companies provide replacement cost valuation as an optional endorsement at a higher premium with the standard being actual cash value. This is a nice benefit from Slice.

The property section contains many exclusions but none of them are unique to Slice’s policy. They are all standard exclusions included in property insurance contracts. They include the so-called “acts of God”, earthquakes, floods, and lightning. We couldn’t find anything in the exclusions that were out of the ordinary or gave cause for concern.

One note of warning. If you are using Slice to insure your short-term rental business conducted in an additional dwelling unit, a separate apartment on your premises, make sure you communicate this to Slice. This ADU or mother-in-law apartment needs to be shown on the declaration page of the property. If it isn’t, it is subject to the “other structures” provision which limits coverage to 10% of the value of your primary building.

Section II – Homeshare Property

This section is also unique to Slice. They are the only company that has put thought into the specific risks and losses that a short-term rental host might encounter. They include such things as accidental breakage of valuable articles. Slice waives the deductible on this coverage presumably because they know the emotional distress that comes with a loss of valuable possession. It’s a nice touch!

Excessive Use of Utilities

A few Airbnb and VRBO hosts have reported rather nasty surprises on their internet bills as a result of guests’ excessive usage. If your internet bill, or any utility bill, is more than double your average bill, Slice will cover the difference up to $1,000 with no deductible.

Crazy Renter Insurance

It’s not actually called “crazy renter insurance” but I like to think it should be. This coverage, titled “hospital and medical expense”, covers any medical bills you or another guest might incur should your renter turn out to be some sort of crazed lunatic. Here’s hoping that never happens!

Infestation Coverage aka Bedbug Insurance

Slice also helps out in those painful times when you’re hit with a bedbug infestation. It will provide up to $5000 for fumigation and cleaning to get rid of the little critters. One caveat, it does require that you prove the infestation was attributable to one of your renters. I have no idea how you would do that other than getting the poor sod to admit it.

Rental Interruption Coverage

This is Slice’s version of the business income coverage typically included in a business insurance policy. Slice covers your actual loss of income should your property be damaged and you have to cancel future reservations for a maximum period of 12 months.

Vandalism and Malicious Damage (aka Party Time!)

The people at Slice have read the stories of properties being rented on Airbnb and used to host parties with dire consequences. They provide coverage for damages.

Section III – Liability

The liability insurance section of the Slice policy is based on a standard liability form. We noted a few differences from the liability insurance coverage included in a standard homeowners policy.

Liquor Liability

Most homeowners policies exclude liability for incidents involving alcohol but only if the insured is in the business of selling and serving alcoholic beverages. Slice takes a different approach and denies coverage for any damages claimed against you should you choose to enjoy a few drinks with your guests. So be careful not to overdo it with them!

Canine

We were somewhat confused with Slice’s policy language as it pertains to dogs on your premises. The relevant clause states: “This insurance does not apply to Bodily Injury or Property Damage arising out of direct physical contact with a canine described in the schedule that is owned by or in the care, custody or control of Renter. “

We understand coverage being excluded for any damages caused by guests’ dogs but the inclusion of schedule dogs names and specific breeds that are excluded makes this clause very confusing. We assume that coverage for damages resulting from damage caused by dogs, whether the dog is owned by you or your guest, is excluded.

Section IV – Homeshare Liability

Slice lists 6 additional coverage clauses pertaining to situations where your guests might cause damage to another person’s property or cause them bodily injury.

Vandalism & Malicious Damage

Damage caused by your guests to another person’s property. Should the person suffering damage decide to sue you as the host, this policy will provide coverage.

Water Damage to Third Party Property

Should your guest cause a blocked toilet which overflows, seeps through the floors, and causes damage to the property below, Slice will provide coverage for the resulting damage to your neighbor’s property. Such an incident happened at an Airbnb rental in Los Angeles.

Host Liquor Liability

This policy will provide you with protection should you be named in a lawsuit resulting from your guests serving alcohol to others on your premises. The limit for this coverage is capped at $500,000 per occurrence and per year.

Cyber Risk

In the highly unlikely scenario of you being sued because one of your guests is hacked while using your internet, the policy will pay up to $25,000 per occurrence with a $50k limit per year.

Fungi/Mold Liability

Should a guest fall ill, or suffer an allergic reaction, and somehow attribute this illness to your property, they might sue you. If they do, don’t worry because has you covered up to $25,000.

Infestation Coverage

This is a coverage added to your own expenses for the remediation of a bedbug infestation. Should you not catch the problem quickly enough, and your next guest takes the little critters home, then they might sue you for their expenses. The policy will provide coverage for any liability you might assume from this occurrence up to a maximum of $25,000.

Underwriting Criteria – Private Rooms vs Entire Spaces

Proper Insurance is the only other company providing insurance specifically for people renting space to short-term guests in their primary residence. We review their short-term rental coverage here.

Slice Insurance differs from Proper Insurance in that they also include coverage for homeowners renting private rooms in the main part of their home. Proper Insurance will deny applications for coverage from hosts who want to share their homes with guests. For homeowners (or renters) wishing to rent out bedrooms in their home, and share the space with them, Slice Insurance is the best option.

How does Slice Short-term Insurance work?

Being techie folks, the Slice team has made it simple for you to insure your Airbnb or VRBO business. You simply sign up for an account, enter your property details and then the details of your Airbnb, VRBO, and FlipKey reservations. Slice immediately provides a price, you click to confirm and enter payment details.

That’s it. No need for you to call an agent every time you receive a booking. Slice doesn’t differentiate between guests so they don’t give you one price for the sweet couple from the Midwest and another price for the young dudes in town for homecoming. It’s very straightforward and simple.

For convenience, Slice also has an app so you can add reservations on your smartphone. Unfortunately, they aren’t yet integrated with Airbnb, VRBO and the other platforms so your reservations don’t appear automatically in the Slice account. I’m sure that will change soon.

Pros and Cons of Slice Insurance for Airbnb Hosts

Slice Insurance gets kudos for being the first, and so far only, company to provide insurance for Airbnb hosts who are renting out private rooms in their main home.

Airbnb was founded on the premise that a lot of travelers want the “local experience”, the inside scoop that can only be experienced through getting to know local people. Hosts were always meant to be more than just the providers of accommodation. They represent the insider’s guide to what’s cool in the neighborhood.

This experience can only be achieved through interaction between the host and guest. Unfortunately, insurance companies think this behavior presents significant risks and they don’t want to insure those risks. Thankfully, Slice Insurance is here to save the day.

Slice is the only company currently offering insurance protection for homesharing. They are also the only company providing coverage for tenants who are re-renting rooms on Airbnb.

Thumbs up for Slice Insurance and their short-term rental insurance for hosts wanting to provide a truly local experience for their guests!