What to Know
Before you make your home available to guests on a vacation rental app or website, check with your property insurance provider
Homeowner’s insurance may not fully cover damage caused by renters if your policy isn’t up-to-date
Vacation rental apps may offer liability insurance and property damage coverage — but carefully read the terms and conditions
Millions of homeowners worldwide are making what seems like easy money, renting out their homes on vacation rental websites and apps. Airbnb, HomeAway, VRBO, and others offer short-term rental booking services for homeowners and renters alike.
Whether you’re already renting out your home or considering it, we have a warning. It follows a five-month investigation by NBC Bay Area Responds that became the largest case we’ve tackled.
At stake: $1 million because a couple’s home in Sonoma burned down while Airbnb guests were renting it.
‘The house is on fire … the whole house!’
This story begins in the early morning hours of May 21, 2017, when a frightened young woman called 911 from a mountainside just west of Sonoma.
In an audio recording of the call obtained by NBC Bay Area, a tinge of panic can be heard in the woman’s voice as she describes the situation to an emergency dispatcher.
- CALLER: “We’re up in the mountains.”
- 911 DISPATCHER: “I see that. We’re already starting help.”
- CALLER: “The house is on fire.”
- 911: “What part of the house?”
- CALLER: “The whole house!”
Eight Airbnb guests were staying in the three-story house that overlooked the Sonoma Valley. Fortunately, all eight escaped the flames unharmed. Minutes after they made it out, the burning house came crashing down.
The Sonoma Valley Fire and Rescue fire marshal’s report on the incident notes non-code electric work near a wooden outdoor deck. Investigators also noted two of the Airbnb renters admitted they were smoking on that deck, about an hour before the fire started:
- It was possible that one of them threw cigarette butts over the deck railing or dropped some on [the] deck.
Ultimately, the fire’s cause was declared “undetermined” by the fire marshal. But no matter what ignited the flames, the house was a total loss.
The $1 million question
After the fire, the homeowners obtained a contractor’s estimate to rebuild. The estimate: $1.8 million.
The homeowners — who are remaining anonymous — told NBC Bay Area they received a $600,000 payment from their property insurance provider, but not the $1 million they were counting on from Airbnb. Its “Host Guarantee” offers homeowners “Property damage protection of up to $1 million for every host and every listing—at no additional cost.”
Consumer attorney Robert Tauler says promises like the Airbnb Host Guarantee aren’t always easy to redeem.
“They don’t just write checks for a million bucks without kicking the tires, for sure,” Tauler said.
Tauler specializes in holding tech companies accountable for their advertising. He says simple assurances spelled out on an app look easy, but putting those promises into practice — like after a fire — might meet resistance.
“Frequently, their acts are inconsistent with their words,” Tauler said. “That’s a real serious problem.”
The Sonoma homeowners said Airbnb gave them the runaround. They said they filed a claim shortly after the fire, in June 2017, and expected the $1 million promised by the Host Guarantee. Sixteen months later, they were still waiting for an answer. That’s when they reached out to NBC Bay Area:
“It’s one thing if they communicate with us and dispute our claim; it’s another thing to stay silent.”
– Sonoma homeowner, in an email to NBC Bay Area Responds
NBC Bay Area reviewed the 25-page Host Guarantee and contacted Airbnb. We kept a conversation going over five months. Then, last week, Airbnb closed the case.
Are the Sonoma homeowners getting the $1 million payment? They can’t tell us. Airbnb required them to sign a confidentiality agreement. They only told us, “We are not supposed to discuss it any further.” However, in that same final email to us, they added, “The story is as we informed you before, and we are tremendously grateful for your help.”
We asked Airbnb to talk with us about what happened. It responded:
“The issue has been resolved, though as part of it, we will not be able to participate in your segment.”
– Airbnb spokesperson, via email
Lessons for other homeowners
The Sonoma homeowners were lucky, in a sense. Not every home rental site carries a $1 million guarantee like Airbnb. And as the couple in this story learned, you can’t count on full coverage from everyday home insurance.
Janet Ruiz, Director of Strategic Communication for the Insurance Information Institute, says homeowners should carefully review their coverage before signing up for a short-term rental gig.
“If you’re thinking about renting out your home, your regular homeowner’s insurance may not be adequate,” Ruiz said.
Insurance providers are firm: risk increases with renters under your roof. Before checking in any guests, homeowners should check their policy. Extra insurance might be needed.
“These coverages aren’t expensive,” Ruiz said. “But they save you a lot of money if you have a loss.”
Ruiz said if homeowners have the wrong insurance, they could get nothing after a renter causes damage. For some policies, a small add-on will do; others may need a “bed and breakfast” or “landlord” policy.
“Having the right insurance coverage will help you at the end of the day,” Ruiz said.
This post was originally posted at http://www.nbcbayarea.com/news/local/Fire-Prompts-1-Million-Dispute-With-Airbnb-509917461.html.