Humphrey Bowles, Top Hog at insuretech company GUARDHOG and Airbnb Superhost, gives us his top tips on short term vacation rental insurance.
The rise and rise of home-sharing
Home-sharing is no longer a niche economy, it’s officially mainstream. The early adopters have come and stayed, and now the majorities are fully involved fluffing towels and plumping pillows. I know this for a fact, as my mother proudly declared that, she too, is getting involved and becoming a host.
It’s an exciting time to be involved in this brave, dynamic, new world of peer-to-peer ‘sharing’. It’s old news that home-sharing has become a popular alternative to hotels. Anyone who’s anyone is already earning extra income from their unused or underused asset – a spare room, or if you’re away, your entire home. Or you’re home-swapping, house-sitting or even letting people work from your kitchen table.
For people with holiday lets, and those managing a portfolio of vacation rentals, the home-sharing economy provides access to a huge range of potential guests looking for an alternative experience to the traditional hotel – one that provides a more authentic local experience. Like staying with my mom.
After considering the potential returns on putting your home to work, many hosts’ thoughts turn to the risks: things like malicious or accidental damage, or if a guest has an accident. Those managing portfolios of properties are also more actively looking for a solution. With home-sharing now mainstream, hosts put proper policies in place as they cannot shut their eyes to the risks – they need to be protected with the right kind of vacation rental insurance.
Insurance for home-sharing
Insurance, or rather the idea behind insurance, is simple: rather than crossing our fingers and hoping that the worst will never happen (or only happen to someone else), we contribute to a pot that promises to compensate us if our most valuable possessions are lost or destroyed. Sounds simple, but traditional models of insurance simply don’t ‘fit’, or cover, today’s peer-to-peer transactions, especially when it comes to hosting.
We know, for example, that when hosts welcome guests and hand their keys over to a stranger, their existing insurance is likely to be compromised. Few insurers will cover theft by a guest, unforced entry, or malicious or accidental damage. And if a guest has an accident – they fall off a balcony, for example, something that actually happened to a guest renting an Airbnb property – they will probably not be covered either.
Sharing economy transactions require personalized and flexible insurance. The great news is innovative new insuretech start-ups are disrupting the traditional insurance market. They are creating insurance solutions driven by technology – changing both the customer experience and the customer’s relationship with insurance. One of these insuretech innovators is GUARDHOG, who set out not to reinvent insurance, but to invent efficient and accessible insurance designed specifically for peer-to-peer ‘sharing’. GUARDHOG’s Host Cover helps hundreds of homeowners, as well as their paying guests, share safely by delivering 24/7 on-demand insurance through their platform, with homeowners paying only for the nights they need cover.
To ensure you or the owners of the properties you manage are protected, here are six essential dos and don’ts to getting the right vacation rental insurance:
1. Don’t assume… your existing home insurance policy will cover you
Many property owners think they are automatically covered by their underlying home insurance policies. But, many insurers consider making money from your home a commercial activity, and so they are likely to compromise, or completely invalidate it. And for those rare few insurers who say they do cover home-sharing, make sure they provide the cover you need. There is a difference between your insurer allowing you to ‘home-share’ and being properly covered when you’re ‘home-sharing’.
2. Don’t assume… you need a landlord policy for home-sharing
Landlord policies don’t work for home-sharing because they are traditionally used for ‘tenanted’ properties – and require intensive checks on tenants. These checks are not carried out on guests staying only a night or a few days at a time.
3. Don’t assume… Airbnb’s Host Guarantee provides the cover you need
Platforms, such as Airbnb, have done a great job of providing some cover through their guarantee, but they make it clear that this is not a substitute for insurance. Airbnb encourage all their hosts to have proper insurance in place, so follow their advice.
4. Do… Speak to your insurer, or if you’re a property manager, ask your hosts to speak to theirs
We know that no-one wakes up in the morning looking forward to speaking to their insurer, but it’s important to have ‘the chat’. The worst thing they will say is that they ‘won’t cover’ you. And it’s better to know, and put in place the cover you need, before something goes wrong.
5. Do… Document it
If you are a property manager for lots of hosts, make sure you get written confirmation from each of your hosts to say they have the right insurance in place. It only takes a sentence, but having it can save you a huge amount of hassle in the long run. It’ll also mean you’ve taken all reasonable steps to make sure your hosts are properly informed.
6. Do… Fill the gaps in your insurance cover with the right ‘sharing economy’ cover
Sharing safely is a must-do for hosts and their guests, so make sure you fill the gaps in your insurance. GUARDHOG’s ‘Host Cover’ complements existing home insurance policies. Hosts do not need to replace their existing policy with vacation rental insurance, and it’s purchased on a stay-by-stay basis. In other words, you only pay for insurance when you actually have guests to stay.
It covers you for all the risks created by having guests in your home including malicious damage, accidental damage, theft by the guests, unforced entry, public liability – which is when a guest falls out a window, down the stairs, slips in the shower or the heavens (your bedroom ceiling) collapses on their head.
At GUARDHOG, we believe in the power to share safely and we’re here to help grow the home-sharing market. We believe that by working together we can help hosts to put more resilient and trustworthy pillars in place, just in case things don’t go quite the way they were planned. And by working together, you get peace of mind knowing that you, (or if you’re a portfolio manager, all your hosts) are properly insured.
About the Author
Humphrey Bowles is Top Hog at GUARDHOG, specialists in full fat, fuss-free on-demand insurance for the sharing economy. Not only is Humphrey an insurer and professional expert in the sharing economy, he’s also a participant. With his family, he is an Airbnb Superhost – ‘home-sharing’ his West London property on the platform.