The trials of the insurance industry to adequately cover risks represented by ride-sharing services like Uber and Lyft have been well-documented, but now a new member of the so-called “sharing economy” is making waves.
Roughly 40,000 people a night rent accommodation from San Francisco-based Airbnb, a service that matches hosts and guests in 30,000 cities in 192 countries. More than 4 million people have used Airbnb since its launch in 2008, preferring the low price and intimate experience tied with renting from individuals rather than large corporate chains.
While travellers have embraced Airbnb, however, insurance carriers and producers have struggled to approach the complex liabilities associated with renting out a private residence.
A new product from Peers, the prominent sharing marketplace, emerged last week offering up to $1 million in coverage beyond existing homeowners or renters insurance an Airbnb host may have. However, a report from Skift.com reveals that these and other, similar insurance products don’t cover a large portion of the hosting economy.
Airbnb hosts who don’t own the home or apartment they are renting out have liability that is not answered by the Peers product or many others—specifically, by renting out their space, they are in violation of their lease.
“The [Peers] policy does not cover breach of contract,” Kenneth Porter of Porter & Curtis, LLC told Skift.
The report noted that some landlords have actually had insurance coverage withdrawn when insurers discover Airbnb listings on their property.
That’s a problem common to the sharing economy, whose services and activities blur the line between personal and commercial use. And while industry leaders say it’s likely carriers will begin to offer products that address these risks, insurance producers for now are left with few options.
From an E&O standpoint, at least, insurance agents working with landlords or personal lines clients who offer Airbnb services ought to make policyholders aware of exactly what such a hosting insurance policy covers and—in this case—what it does not.
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