Airbnb: When a home becomes a hotel

The new frontier of the sharing economy brings many rewards and much confusion.  By making their cars or their homes available for others to use, people benefit financially while offering convenient, lower cost services to their consumers.  This enormously popular business model has gone positively global.  Airbnb’s home sharing network now covers 190 countries and thousands of cities.  But what happens if someone is injured or damages property while occupying an Airbnb rental? At present, determining liability for personal injury or property damage is not always clear, and there is no guarantee that a person who suffers harm in relation to an Airbnb home share will receive compensation.

What Airbnb Is and Is Not

Unlike the hospitality industry, which provides hotel services and accommodations, Airbnb is an online “platform” linking home sharers with potential paying guests.  In this sense, Airbnb is like an electronic bulletin board, a middleman whose principal purpose is to make connections.  Airbnb does not function as an agent of the home sharer, nor does it make any guarantees about the quality, condition or legality of the rentals. If you are injured while staying at a hotel, the hotel generally assumes liability for the unsafe condition that harmed you.  If you are injured in an Airbnb rental, you have no assurance that Airbnb, the host or the host’s landlord will be liable for negligence or compensate you for your injuries.

Illegal and Uninsured?

In October of 2014 the New York State attorney general reported that nearly 75% of the city’s Airbnb rentals violate zoning or other laws.  Some of the city’s landlords have set aside numerous housing units intended exclusively for short-term rentals.  In essence, these landlords are operating illegal hotels.  And, due to the growing number of strangers and transients in these buildings, long-term residents no longer feel safe in their homes.  When so many strangers and transients have keys to the front door, security is difficult, if not impossible, to maintain.  Exposing the building’s long-term residents to dangerous and undesired guests creates unsafe conditions and increases the risk of assault and personal injury.  Landlords who knowingly rent to transients may become liable for injuries and property damage caused by failure to ensure that there is adequate security on the premises.

If you are injured in an Airbnb rental, you cannot assume that your host is carrying an adequate level of insurance. For example, you may be hurt because a poorly installed shelf falls on you.  Most homeowner policies will not cover commercial activity on the premises, such as using one’s home for profit.  Therefore, it may be difficult for you to recover compensation for your injuries from the Airbnb home sharer.  Although Airbnb advises potential home sharers to carry adequate insurance and obey all local housing regulations, its actual responsibility to the renter and home sharer appears quite limited. Therefore, Airbnb’s third party liability for negligence is difficult to determine at this time.  Because it asserts no actual knowledge of the safety and suitability of its home shares, it appears to shield itself from a duty of care to home sharers and renters.

If you are an Airbnb host and a renter vandalizes your home or steals your property, you may find your homeowner’s insurance policy inadequate to cover this type of harm.  Airbnb offers a one-million dollar Host Guarantee in the event that a renter deliberately or recklessly damages a host’s property.  But this is not actual insurance policy. Hosts must first exhaust all attempts to recover compensation from their insurance companies, as well as from the guest.  Airbnb exercises complete discretion in deciding whether or not to pay our claims, and its Host Guarantee is loaded down with terms and conditions.

The Future of Airbnb?

Airbnb’s flexible, libertarian approach to home sharing may be short-lived.  Municipalities like the city of San Francisco are already taking steps to regulate transitory rentals like Airbnb’s.  Among the legislative requirements recently proposed, hosts must occupy their housing units at least 75% of the year.  They must register with the city, pay a fee for a permit, and maintain at least $150,000 worth of property or casualty insurance.  In addition, home sharing rentals would be subject to the same 14% tax as hotel rooms.

The sharing economy has mushroomed so quickly it is sometimes difficult to recognize all the risks and advantages associated with it.  Lack of clarity seems to be the norm and many issues await resolution and further regulation.  If you or a loved one has suffered injury or property damage in connection with a home sharing rental, contact the New York premises liability attorneys at the Orlow firm.  The initial consultation is free.  For your convenience, we maintain four offices throughout New York City. Call (800) 504-9590 or contact us online.