Underinsurance is a major issue in the shared accommodation market 

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The shared accommodation market is underinsured, and this includes Airbnb. A new report says that around one million short-term letting hosts are being inadequately covered by the UK’s major insurers.

As a result, hosts are exposed to a range of risks such as extortionate cleaning bills, property damage caused by wild parties, and theft.

Recently Airbnb has come under scrutiny after HMRC cracked down on tax evasion from income earned by those who rent out a property.

‘Many hosts fall into a void of no cover and are at risk of financial loss through no real fault of their own’ 

Louise Birritteri, Pikl

The lack of specialist cover for short-term letting presents a market opportunity for insurtechs.

The report – Insurance in the Sharing Economy – 2019 Property Focus – published by sharing economy insurance specialist Pikl has uncovered issues where short-term letting hosts are being neglected by the industry. Pikl saw a huge gap in the market between the lack of cover between home insurance and the Airbnb Guarantee.

Louise Birritteri, chief executive at Pikl told Insurance Times: “It’s now up to the industry to come together to resolve this issue.

“Because it is such a new and specialist area of the insurance market, it’s not just down to insurers.

“Brokers, comparison sites and software companies need to contribute to navigating an effective customer experience for this new short-term letting economy and the people who participate in it.”

She said Pikl’s study highlights a “gaping hole” in awareness about insuring shared accommodation. 

The report looks in-depth at the attitudes of the UK’s major insurers towards the sharing economy. 

It is based on a combination of ‘mystery shopping’ and interviews with representatives of the UK’s major insurers, which manage 90% of the gross written premium of the country’s property insurance market.

Birritteri said that there was a “false expectation” by hosts that they be will be covered by standard home insurance, while in fact they may need specialist cover. But this is almost non-existent.

“Combine that with the lack of clarity over customers’ responsibilities to inform their insurer, the absence of proactive communications from insurance companies and comparison sites and the misperceptions about platforms like Airbnb’s own guarantee, and you find that many hosts fall into a void of no cover and are at risk of financial loss through no real fault of their own,” she said.

Pikl launched a range of specialist insurance products to cater specifically for these customers running alongside standard home and landlord policies from any insurance provider.

The company says it will provide all-inclusive plans in collaboration with a panel of insurers.

Severe exclusions

The study also found that more than one-third of insurers said they would cancel a customer’s policy if the customer declared that they wanted to use their property for short-term letting, such as Airbnb.

Moreover, where insurance is available it’s usually for a term of no more than 30 days and imposes severe exclusions. These can include theft, malicious damage, legal expenses, accidental damage and legal liability.

However, most insurers admitted not telling customers they should declare that they are short-term letting and none included a question on the subject in its set. 

And most insurers may not pay out on a short-term letting related claim, if the activity had not been declared in advance.

Half of the insurers said they would provide cover for landlords that were short-term letting if the policyholder informed them, but sub-letting by tenants would likely lead to a policy cancellation.

A spokesperson for Direct Line said: “Direct Line’s standard and ‘home plus’ insurance products may cover customers if they are letting a room or their property on an occasional basis, but not if the letting was frequent.

“However, Direct Line will not pay any liability claims for any damages the customer might incur as a result of letting out the property.”

Public liability cover

Nicole Rogers, solicitor at DAS Law said there was “no legal obligation” for hosts to take out public liability insurance, but recommends they do to cover them in the event of an injury claim.

And she warned that millions of Airbnb users may have unknowingly breached the terms of their tenancy, leaving them exposed to legal action or even the loss of tenancy.

Most tenancy and leasehold agreements are likely to state that the property may only be used as a private residence, preventing tenants from “sharing” their home for short periods.

Rogers recommended that anyone letting their property out through Airbnb should check their tenancy or leasehold agreements first.

“The insurer will not usually have catered for paying guests when arranging the policy. The host would need to clarify with their insurer as to whether their cover would be sufficient to cover losses.

“Airbnb does offer a ‘host guarantee’ whereby the firm promises to reimburse hosts for damages of up to £600,000, although the company adds that hosts should not consider this as a replacement for owners or renters home insurance,” she added.

Rogers concluded that although a host is not required to take out specific landlord insurance, it would be advisable to speak with a specialist broker or insurer for sufficient cover.

Overall, UK insurers in Pikl’s study admitted that they must do better. 

What is Airbnb?

Airbnb is a global company which operates an online marketplace and hospitality service accessible via websites and mobile apps.

It is based in San Francisco and has 31 offices worldwide. It was launched in 2008 by Brian Chesky, co-founder and chief executive, and Joe Gebbia, chief procurement officer and co-founder, and Nate Blecharczyk. The first listing was in Chesky and Gebbia’s San Francisco apartment to make money for rent in 2007. It was originally called Air Bed and Breakfast but changed its name in 2009 to expand beyond letting out rooms to apartments, houses and vacation rentals. 


Airbnb’s 2017 revenue reached $2.6bn, and each night more than two million people stay in homes listed on its marketplace. To date it has had 400 million guest stays, its accommodation marketplace provides access to more than 6 million listings to stay in over 81,000 cities and 191 countries. This includes 4,000 castles and 2,400 treehouses. In 2017 it saw more than 49 million trips at Airbnb listings worldwide


Airbnb provides two forms of cover:

  • Its Host Guarantee was launched in 2012 and covers listings for up to $1m in damage. It is free for all hosts and automatically covers all bookings.
  • The company later rolled out its Host Protection Insurance programme in 2015, covering hosts and guests for injury in a property as well as primary coverage for Airbnb hosts worldwide.


Property damage claims valued at more than $1,000 that were reimbursed under Airbnb’s Host Guarantee programme were reported in only 0.004% of visits.