Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

Ms. Pfeffer eventually found a solution, but it wasn’t easy. And this is mostly the fault of the insurance industry, which doesn’t always want to answer questions about this sort of activity, whose agents aren’t always as knowledgeable as they should be and whose own policy language can be incredibly confusing.

This isn't the "fault" of the insurance industry. Homeowners insurance policies mitigate the standard risks of residences. They don't cover hotels, which have wildly different risks due in part to the radically different incentives and risk tolerances of hotel room occupants.

This whole article is premised on the idea that it shouldn't be hard to figure out which homeowner's policies can be abused to cover ad-hoc hotel businesses. I'm alarmed that there are policies that do work that way; if I were a Liberty Mutual customer, I'd be painfully aware that my premiums took into account the idea that I might rent out my own house that way.

I sort of adore Airbnb and have never had a bad experience with it, but everyone in the Airbnb ecosystem appears to be relying on denial in one way or another.

1) Insurance companies mitigate a lot of risks that are a lot rarer. It's pretty common to do a short-term rental, rent out a room to a roommate. Doing the occasional Airbnb rental is essentially the same thing.

2) Insurance companies should have a straightforward answer to a reasonable question. Not covered, covered if rental income < $15,000 , needs a rider, etc. Of course, at some point you're operating a B&B and you need to get commercial insurance, and they should be able to tell you at what point it would be considered a business.

3) If Airbnb's secondary coverage is predicated on a primary coverage that is not standard or impossible to get, then yeah, it's denial. If it's predicated on a normal homeowner's liability policy with a standard rider, seems pretty reasonable. Maybe I'm missing something.

4) If the liability is hard to predict now that Airbnb is as big as it is, there probably haven't been that many claims.

The commonality of a short-term rental isn't the issue. What matters is that the liability changes massively as soon as you charge someone money to come into your home, rather than inviting them as your guest.

My takeaway from the article is

- State Farm is a mass-market company - no Airbnb

- Chubb is an upmarket company - $15k revenue limit

- Liberty Mutual is a mass-market company - 'occasional' rental, cannot be 'engaged in business' - rather vague

Problem is the vagueness, and the Chubb and Liberty Mutual agents contradict the firm's spokespeople, which is kind of their fault. They should get it together when it comes to Airbnb. Pretty common, easily insurable use case with a known claim history.

Of course, if you want to run a hotel business, you need a commercial policy, and many if not the vast majority of Airbnb-ers skirt the rules.

So yeah, when you do that, there is a massive change in liability, and yeah, if you don't get the right insurance there's denial.

If somebody trips and falls and sues you, or burns down your place, and the insurance company says you were running a hotel business and denies your homeowner's claim, you're screwed. I don't know what Airbnb's umbrella does for you then.

Yea, this article is bullshit. It says "The agent made some noises about installing fire escapes from every bedroom and buying a commercial policy that might have cost more than her annual rental income, but that was out of the question." In other words, "the insurance company was super fucking clear in answering her questions, but she really didn't like their answers so pretended it was confusing".

If a Liberty Mutual policy's premiums specifically take said activity into account, their actuaries must have considered that activity in the process of putting it to paper, yes? At which point (it seems to me) calling it 'abuse' is begging the question.

If (and I think this more likely) Liberty Mutual, Ms Pfeffer, or both have failed to correctly consider the implications of their contract, then this becomes a question of civil law (perhaps of reasonableness?) that's difficult to answer without access to said document and a good legal opinion.

The possible implications for the homeowners insurance industry (and for the Airbnb ecosystem) might be interesting, but meaningfully (if tacitly) assigning fault is outside the practical scope of a public discussion, don't you think?

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