Greg Offner, a producer with the Graham Co., tells GlobeSt.com that overthe past few years the rental startup Airbnb has taken center stagein the global “sharing economy.”

He says in this exclusive commentary that Airbnb offers unique,affordable experiences to travelers and an easy way for renters tomake quick cash. But with the cost of travel today, it's nosurprise, he says.

“Airbnb's popularity has skyrocketed. However, this growingpopularity has unintentionally opened building owners up to a newworld of risks.”

The views expressed in the following guest commentary arethe author's own.

Although the majority of travelers and tenants use Airbnbresponsibly, a handful of horror stories have emerged in recentyears. From condos being held hostage by guests citing squatter'srights to stolen valuables, allegations of sexual assault anddamaged property, there is a great deal of risk involved for boththe tenant and the building owner.

In order to mitigate the risks of Airbnb use in your property,you must take a proactive approach by understanding what yourinsurance policies cover, communicating your property's policiesand keeping up with the changing insurance landscape.

The biggest issue with Airbnb

Airbnb requires its users create a profile to use the platform,but it doesn't employ any additional screening or verification.Virtually anyone can have total access to your building withoutyour knowledge or permission if they've booked through Airbnb. Thisis in stark contrast to the standard industry practices mostproperty owners and landlords follow.

Typically, landlords require an extensive application andinformation-gathering process and a background check for tenants tomitigate the risk of damage and liability. In fact, a buildingowner has no contractual relationship with the Airbnb tenant,giving the owner little leverage if an incident occurs.Additionally, a building owner's rights, limitations and dutiesowed when dealing with an Airbnb tenant might not be fully known,which puts the building owner at greater risk.

It's not only a risky proposition for building owners. Manytenants assume their renters insurance will provide coverage in theevent of damage or theft while leasing their unit through Airbnb.If a loss does occur, a tenant's renters insurance may respond andcover losses, but there is absolutely no guarantee.

Continue reading…

In this Oct. 10, 2013 file photo, Mishelle Farer poses forpicture in her apartment, where she rents a room on Airbnb, in NewYork. Farer is an avid user of Airbnb, a website that allowstravelers to rent other people's homes or rooms. (Photo: AP/SethWenig, File)

The market will continue to evolve

As the sharing economy continues to evolve and new companiesemerge, so will the risks and the insurance market as a whole.Where there's a category of risk, the insurance market willeventually find a way to provide an insurance product for it.

Lloyd's is already providing insurance coverage for Airbnbtenants and “sharing economy” endorsements aren't too far behind.These would provide a layer of protection for tenants and owners,but right now this topic is one insurance scholars continue todebate.

• Take a proactive approach. Building owners canprotect their businesses from risks associated with Airbnb byconsidering the following:
• Prohibit use of Airbnb. The best strategy formitigating the associated risks of Airbnb usage in your property isto explicitly prohibit tenants from subletting their units for anylength of time. Property owners should incorporate language intolease agreements specifically prohibiting tenants from usingservices like Airbnb. Property owners should also include anaddendum for tenants to sign that clearly details the property'sposition on Airbnb usage and educates them on the risk Airbnb posesto them, their neighbors and the building owner.
• Monitor Airbnb. If tenants are aware of thebuilding's hard stance on Airbnb usage, it will deter them fromattempting to list their units on the site. However, there willstill be tenants who are willing to circumvent the lease to use theservice. It may not be enough to simply ban Airbnb from yourproperty, even via a legally binding agreement. Another effectivestrategy is to monitor Airbnb and routinely check for listings atproperties you own.
• Consult with an insurance broker. Buildingowners should consult with their insurance broker to understand theway their coverage interacts with a tenant's coverage. Insurancecontracts are complicated documents and may contain exclusions thatpreviously would have been considered innocuous. An insurancebroker may recommend that you specify the insurance limits andcoverages you want tenants to carry.

A final word

As more stories surface about Airbnb gone wrong, we are remindedof the danger of letting a stranger into a property without aproper background check. It's important to consult with your brokerand stay current of trends in the industry to avoid headaches andfinancial losses as a result of Airbnb.

Natalie Dolce is national executive editor of GlobeSt.com.She can be reached at [email protected].

Related: The scary insurance reality for Airbnbhosts

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