According to Airbnb, its site hostsmore than 6 million listings worldwide. (Photo:Shutterstock)

Airbnb has invaded the travel scene by offering vacationers a'home away from home' — a sentiment some renters value more thanothers.

From property damage to stolen goods, allowing strangers into ahome comes with plenty of risks, and the insurance market is stilllearning how to best cover the needs of homeowners who choose tolist their property on home-shareplatforms.

Insurance coverage issues

Unlike a coastal or beach home, for example, which a homeownermight rent out for a season and have risks covered under a standardproperty policy, Airbnb allows homeowners to rent their primarydwelling on multiple, short-term bases, which isn't accounted forin the underwriting process.

"[Homeowners insurance] rates don't reflect the exposure thatgoes with a total stranger living in your primary living space,"says Jim Kane, senior vice president and personal risk practiceleader with USIInsurance Services.

While this situation can risk the application of a policy, inmost cases, property coverage is already underwritten when a homebecomes an Airbnb rental. The factor that most affects whethercoverage will — or will not — apply is revenue, according toKane.

"I think most companies would say less than $10,000 in revenueis immaterial; it's not really a business; it's a hobby. But whenyou get into the $50,000 revenue range, where you're regularlyrenting the house … now you could be up against a potentialbusiness exclusion because that's real income," he says. "[Whenit's] happening at a frequency and/or size that's becominga business, then it will have us concerned, because that's not whatthe rates bear."

Insurers' response

The sharing economy has no doubt rattled insurers, and theindustry is still gaining its footing in the market. As insurancecompanies accept the reality of the sharing economy, more and morecarriers are responding with coverage options.

"We're seeing some of the standard carriers come through withendorsements because [Airbnbs] are becoming more common," commentsKane.

The E&S market and direct-to-consumer startups are alsoanswering the increasing need for proper Airbnb coverage, such asSlice, which offers on-demand home-shareinsurance through a digital platform.

Ensuring adequate coverage and protection

For Kane, it's better for homeowners to be safe than sorry. Herecommends Airbnb owners add additional personal liabilitycoverage, as well as umbrella coverage, on top of their standardpolicy.

"[Adding coverage] is a smart thing to do because it's anexpansion of the original exposure for the coverage that's alreadyput together, and it's confined to the risks that are created byhaving a total stranger coming to your home," he explains.

Furthermore, implementing loss control efforts can help Airbnbowners mitigate exposures. Kane suggests owners should:

• Create temporary security codes for each guest;
• Apply better protections around internet access, such astemporary Wi-Fi codes that only work for specifictime-periods;
• And make sure valuables are locked up and/or removed from thehome before renting it out as an Airbnb.

Establishing better internet security can also protect an Airbnbowner from cyber hackers who can take control of postings or siphonmoney into their accounts when a listing is booked.

But at the end of the day, Airbnb owners must reflect on therisks of allowing strangers to rent out their home andtake the necessary precautions. "The fact is that when you'restaying in another building or home that you don't own, youcertainly don't treat it the same as when you're paying themortgage," Kane concludes.

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