Airbnb’s “secondary insurance” could complicate policies

"Mi casa es su casa," could be the motto for Airbnb, the app that allows homeowners to offer their places up for short-term rentals, like a part-time hotel. For property owners, it's created a platform that can generate extra income from opening your home to temporary paid house guests. 

Despite a rating system that aims to keep transactions reliable, many of the short-term rentals happen when a homeowner is not present. For that reason, many things could go wrong, from damaged furniture to candle fires and even stolen household items, the company mostly operates on good faith that common sense and financial accountability keeps strangers trustworthy. 

One of the perks Airbnb advertises to its users, particularly homeowners, is a free policy covering up to $1 million in damages during a guest's stay. However, the insurance serves as a type of "secondary" coverage. Like Uber, the ride-sharing app, Airbnb expects hosts to process claims through their primary homeowners' policies first, with their free coverage as a failsafe. 

Naturally, this can create trouble for homeowners. Many real estate insurance policies don't provide for damages incurred as the result of commercial activity in a home, an essential provision if a claim is filed to address an issue resultant from short-term house guests who pay to stay in your home. 

"If you're conducting a business, on a full- or part-time basis, by renting out your home or apartment (or a room in your home or apartment) as a way to earn money, your homeowner's or renter's insurance policy probably would not provide liability coverage," Rebecca Hirsch, a USAA spokeswoman, told The New York Times. 

This could put policy holders at risk if they misrepresent the cause of damage. As always, it's important to comprehensively understand your coverage before making big decisions about activity in your home.