I bought my first rental property in 2018. A duplex in Aurora, $285,000, needed some work but had good bones. I fixed it up, rented both units, and thought I was set. I had a standard landlord policy from the same company that insured my primary home. It covered the building, liability, loss of rent. Standard stuff. I never thought much about it.
Then in 2024, I decided to try Airbnb with one of the units. The tenant moved out, I furnished the place, listed it, and started getting bookings. It was going great — $1,800 a month in peak season, almost double what I got from long-term rent. I was feeling pretty smart.
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Then a guest fell down the stairs.
It was a Friday night. The guest, a woman from Texas, had been drinking wine with her husband. She got up to use the bathroom, missed the top step in the dark, and tumbled down the whole flight. Twelve steps. She broke her ankle, fractured her wrist, and hit her head hard enough to need stitches. Her husband called 911. The ambulance came. The police came. And three days later, my phone rang.
It was my insurance company. "We need to talk about your claim."
"What claim?" I asked.
"The liability claim from your Airbnb guest. We're denying coverage."
My heart stopped. "What do you mean denying coverage? I have liability insurance."
"You have landlord liability insurance. Your policy specifically excludes commercial use and short-term rentals. Airbnb is considered a business activity. Your policy doesn't cover business activities."
I pulled out my policy. There it was, on page 14, in 8-point font: "This policy does not cover losses arising from business pursuits, including but not limited to short-term rentals, bed and breakfast operations, or commercial lodging."
I had read that section when I bought the policy. In 2018. Before Airbnb was even on my radar. I had no idea what it meant. I thought it meant I couldn't run a hotel. I didn't think it meant I couldn't rent my property for a weekend.
The guest's medical bills came to $34,000. She also claimed lost wages — she was a consultant who couldn't travel for 6 weeks, so $18,000. Pain and suffering: her attorney asked for $75,000. Total demand: $127,000.
My insurance company paid $0. I was on the hook for everything.
I spent the next 4 months negotiating. I hired an attorney. I settled for $68,000. It wiped out 3 years of rental income. I sold the property in 2025 because I couldn't stomach the risk anymore.
Here's what I learned: standard landlord insurance and Airbnb do not mix. Most landlord policies explicitly exclude short-term rentals. Some exclude any rental period under 30 days. Others exclude furnished rentals. The language varies, but the intent is the same: if you're running a business, you need business insurance.
Airbnb offers "Host Protection Insurance" up to $1 million. But read the fine print. It doesn't cover everything. It excludes intentional acts, it excludes certain types of property damage, and it has a $1,000 deductible per incident. More importantly, it's secondary coverage. That means it only kicks in after your primary insurance denies the claim or pays out its limits. If your primary insurance denies the claim because of the short-term rental exclusion, Airbnb's coverage might still apply — but they might also argue that the exclusion voids their obligation. It's a gray area that lawyers love and hosts hate.
I talked to three other Airbnb hosts after my incident. Two of them had no idea their landlord policy didn't cover short-term rentals. One of them had actually read her policy and bought a separate commercial policy — but it cost $2,400 a year instead of $800. She said it was worth it. After my $68,000 lesson, I agree.
If you're thinking about Airbnb, do these three things before you list your property:
First, call your insurance agent and ask directly: "Does my policy cover short-term rentals?" Get the answer in writing. Don't accept a verbal "I think so." If they say no, ask about a rider or endorsement that adds coverage. Some companies offer them for $300-600 a year.
Second, if your company doesn't offer short-term rental coverage, shop for a policy that does. Companies like Proper Insurance and Slice specialize in short-term rental coverage. They're more expensive than standard landlord policies, but they're designed for this exact use case.
Third, read Airbnb's Host Protection Insurance carefully. Understand what's covered, what's excluded, and how claims work. Don't assume you're protected just because Airbnb says you are. Their coverage is a safety net, not a primary policy.
I lost $68,000 and a property I liked because I didn't understand my insurance. Don't be me. Read your policy. Ask questions. Get the right coverage. The $1,600 a year I would have spent on proper short-term rental insurance would have saved me $68,000 and a lot of sleepless nights.
— Marcus, Denver
