Back in 2011, following a spate of high-profile incidents that resulted in damage to hosts’ property, Airbnb introduced their Host Guarantee. The original guarantee provided up to $50,000 compensation for damage caused by unruly guests.

Reporters love the opportunity to take pot shots at high-flying startups and they found the perfect source of ammo when stories started to break of wild parties being thrown at homes rented on Airbnb. Descriptive accounts of houses being cleaned out by renters were soon to follow. Writers watch like hawks for any signs of journalistic fodder.

Airbnb could have taken a different approach. They could simply have dismissed the stories as rare occurrences, one-in-million shots blown out of proportion. This is the sort of arrogant response that has caused Uber, another high-flying “sharing economy” startup, all sorts of problems and resulted in the resignation of its CEO.

 

Airbnb Trust & Safety

Trust and safety is a critical component of Airbnb’s success. They understand that an arrogant or dismissive response to reports of homes being damaged could severely limit their attempts to attract more hosts. Without more hosts, their room capacity is limited and their business plateaus.

The Host Guarantee program was launched to alleviate concerns new hosts might have before listing their property on Airbnb’s website. Airbnb is not in the insurance business. It is a tech company in the hospitality business. Their creation of the Host Guarantee as a public relations response to negative stories of homes being burgled and damaged has resulted in negative consequences; it has led many to believe that Airbnb will pick up the tab for damages.

Clearly, this is not the case. Whatever Airbnb’s definition of “peace of mind” might be, it is most certainly not one shared by a large number of hosts, especially those who have gone through the arduous claims process only to be denied.

 

What protection does the Airbnb Host Guarantee provide?

Airbnb’s Host Guarantee is essentially a simplified property damage policy. The terms and conditions of the host guarantee, as updated on June 17, 2017, specify that the Host Guarantee covers losses caused by the person who booked your property through Airbnb or an invitee of that guest.

Here is the relevant clause:

“Covered Losses” means and is limited to direct physical loss or physical damage to a Host’s Covered Property caused by the Responsible Guest or an Invitee of the Responsible Guest during an Airbnb stay.

This is the key point of differentiation between Airbnb’s Host Guarantee and a standard homeowners (or renters) insurance policy. A homeowners (or renters) insurance policy covers accidental damage or theft and requires proof of loss without the need to identify a responsible person. In order for the Host Guarantee to reimburse the host for damages, the host must first prove that incurred losses were caused by an Airbnb guest.

In effect, this amounts to a need for the guest to admit to causing damages. If the guest declines responsibility, or simply goes quiet, Airbnb can choose to deny the host’s claim. The only other way a host could prove that a guest caused damages would be to capture the incident on cameras installed within their home. AirCreepy indeed.

One recently reported case provided a clear example of how the Host Guarantee differs from insurance. The homeowner, in this case, would host more than one guest at a time. One guest destroyed their high-end microwave oven and no guests admitted to causing the damage. Since the host could not prove the loss was caused by either guest, Airbnb denied the claim.

In the declination email this host received, Airbnb included this paragraph:

“Airbnb reserves the right to subrogate against any person or entity whatsoever who allegedly is responsible for causing the losses or damages in question. As a result, the identity of the responsible party must be known as a precondition of filing a Host Guarantee payment request form.”

 

The Devil is in the Details (or the Airbnb Claims Process)

Filing a claim with Airbnb’s Host Guarantee program is an arduous process. Opening the claim process is easy enough as this can be done through the host account on Airbnb. But timeliness is critical as you must file the claim notice prior to the next guest arriving.

For many hosts, this might mean a 4 or 5-hour window between one guest checking out and the next checking in. If the host doesn’t notice the damage until a later time or is too busy cleaning to file the claim, Airbnb will deny it. They will do so because the host can no longer attribute blame to a specific guest.

The next step is gathering the documentation required to file the Airbnb Host Guarantee Payment Request Form. This part requires you prove ownership or responsibility for the item or items damaged and the value of such items. Hopefully, you’re one of the rare few who has taken the time to create an inventory of your personal effects and kept your receipts.

You’re not done yet. You need to submit a proof of loss which includes the following:

  • The time, cause and origin of the Covered Loss, and evidence and proof of such loss in the form of receipts, photographs, videos, documents and other verifiable forms of proof.
  • The ownership, leasehold or other interest of you and all other parties in the Covered Property for which Covered Loss is claimed.
  • The Actual Cash Value and replacement value of each item of the Covered Property, as well as the amount of such loss or damage to each item of such Covered Property.
  • All liens, encumbrances, mortgages, guarantees and all other contracts of insurance, whether valid or not, covering the Covered Property that is the subject of the Covered Loss.
  • Any changes in the title, use, occupation, location, possession, or exposures of the Covered Accommodation since the date of the Listing.
  • The identity of and other information known about the Responsible Guest, any Invitee and any other party present at or using the Covered Accommodation where the Covered Property is located for which the Covered Loss is claimed on the date of the Covered Loss, and the purpose for which such Covered Accommodation was being used by such parties on such date and whether or not it then stood on leased ground.
  • The date when you contacted the Responsible Guest to request payment for the loss you are claiming, and the date on which the Responsible Guest declined or failed to pay for the loss.

And don’t forget that if the loss was a theft or other criminal act, you’ll need a police report.

To be fair to Airbnb, these steps are not unlike the steps you would have to follow if you were submitting a claim under your home insurance policy. The problem is that even after collecting all of the documentation required, you still need the “responsible guest” to admit to causing the damage. If the guest declines, you’re probably out of luck.

 

Other Limitations of the Host Guarantee

Policy Rights

You have no policy rights and no recourse. Because you don’t pay for the policy, and you’re not named as an insured on the policy, Airbnb’s word is final. If they decide not to provide compensation and close the case, there’s very little you can do about it. There have not yet been any cases of people filing a lawsuit for damages or misrepresentation against Airbnb for any perceived failing of the Host Guarantee program but we assume that any case would be difficult to win because a host has not purchased the insurance contract and Airbnb already states that this coverage is secondary and not primary.

Indirect Losses

Another thing to note on the “covered losses” clause is that Airbnb will only be responsible for “direct physical loss”. What this means is that if a guest causes a fire which not only destroys a host’s property but also takes out an entire apartment complex, Airbnb will be responsible for the host’s property only. I wonder how many guests would admit responsibility for causing such damage knowing that they could be personally liable for the damage to an apartment block. Run and hide would seem to be a pretty rational response. The problem is that the host could be on the hook instead.

Actual cash value

If you’re lucky enough to have a claim approved for a payout, the property loss will be valued at actual cash value (ACV). This isn’t uncommon but most property insurance policies provide an option to upgrade to replacement cost value (RCV). No such option is available with Airbnb.

 

Summary

The Airbnb Host Protection program is better than nothing but it’s far from “peace of mind”. No host should expect the Airbnb Host Guarantee to provide compensation for losses. No host should rely on the Host Guarantee to protect them against the risks of hosting guests.

As Airbnb states: “The Host Guarantee should not be considered a replacement or stand-in for homeowners or renters insurance.” It’s a backup plan and those hosts lucky enough to receive compensation through this program should consider it a bonus.