How Airbnb can cost you dear

You should think twice before renting out rooms through Airbnb - you may not have the insurance cover you think.

After one man was left with £12,000 worth of damage to his luxury London flat, insurance comparison website Gocompare.com Home Insurance is warning people to check with their home insurer, landlord or mortgage provider before signing up as hosts.

Nigel Broome let his Forest Hill, south-east London flat over the New Year through Airbnb. But, he says, the guests threw a massive party and ruined the floors, punched holes in the walls and broke furniture.

In this case, Airbnb may cover the cost through its host guarantee - but that guarantee doesn't cover everything.

"Some peer-to-peer lending sites provide insurance cover for home-hosts but, cover for damage to property is generally limited and personal liability is typically excluded," says Gocompare's Ben Wilson.

"For example, Airbnb's host guarantee provides protection for up to £600,000 in damages – but, this excludes cover for cash, pets, personal liability, shared or common areas while providing limited cover for valuables, collectibles and artworks."
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To make sure you're covered for everything, you'll need to contact your own insurer.

"Household buildings and contents insurance premiums are, in part, based on who lives in a property and whether it is used for purely residential or business purposes. So your insurer will want to know if you plan to let out your home in part or entirely, even on a short-term basis," says Wilson.

"They then may refuse cover, charge an extra premium or put restrictions on the cover provided. For example, theft may be excluded unless there are signs of a break in."

Even worse, failing to tell your insurer about your plans to host paying guests could mean they refuse to pay any claims at all, even those that are unrelated.

British hosts, at least, are likely to be spared the ordeal of one Californian woman who was forced to take legal action after a guest refused to leave. Airbnb wouldn't help, as the let was officially over, and under California law the guest had a case for squatters' rights.

"With thousands of properties listed for rent in the UK, many people use these sites to earn extra income from their homes," says Wilson. "But welcoming paying guests into your home without first checking the implications for your home insurance, lease or mortgage could be a costly mistake."