Platform guarantees are not insurance. Do not confuse the two.
Airbnb has AirCover. VRBO has a damage protection programme. Booking.com has a damage policy. All of them sound reassuring. None of them are a substitute for proper insurance.
If you are running a short-term let with no insurance beyond what the platform offers, you are one bad booking away from a financial disaster. This guide explains why, and what cover you actually need.
What AirCover actually is
Airbnb's AirCover for Hosts provides up to $3 million in damage protection and $1 million in liability coverage. On paper, that sounds comprehensive.
In practice:
- It is not an insurance policy. It is a guarantee programme with terms and conditions set by Airbnb, not by an insurance regulator
- Claims are at Airbnb's discretion. Airbnb decides whether to pay, how much to pay, and when. You cannot appeal to a financial ombudsman if they reject your claim
- It does not cover wear and tear, minor damage, or damage you cannot prove. If a guest scuffs your walls or stains your carpet, good luck
- It does not cover bookings made outside Airbnb. If you also list on VRBO, take direct bookings, or host friends-of-friends, AirCover does not apply to those stays
- It does not cover loss of income. If damage from one booking forces you to cancel the next three bookings while repairs are done, AirCover does not compensate the lost revenue
- It does not cover your buildings or contents against non-guest events. A burst pipe, a storm, a fire that starts from a wiring fault - these are not guest-caused and AirCover does not cover them
VRBO and Booking.com damage programmes have similar limitations. They are guest-damage mitigation tools operated by the platform, not insurance products regulated by the FCA.
What insurance you actually need
1. Buildings insurance
Covers the structure of the property - walls, roof, floors, windows, permanent fixtures. This is the policy that pays out if there is a fire, flood, storm, subsidence, or other structural damage.
Critical point: Your buildings insurance must explicitly cover short-term letting. A standard residential buildings policy will typically exclude commercial use. If you claim on a policy that excludes STL use and the insurer discovers you were letting, the claim will be rejected.
If you have a mortgage, your lender will require buildings insurance. Make sure it covers STL use and that your lender knows the property is a short-term let.
2. Contents insurance
Covers your furniture, appliances, linens, kitchenware, electronics - everything a guest uses. STL-specific contents insurance should cover accidental damage by guests as standard, not as an add-on.
Pay attention to per-item limits. If you have furnished the property with expensive items (a high-end coffee machine, designer furniture, smart TVs), check whether the standard per-item limit covers them or whether you need to specify them separately.
3. Public liability insurance
Covers claims from guests (or their visitors) who are injured at the property. A guest slips on a wet bathroom floor. A child falls down the stairs. A dog bites someone in the garden.
In Scotland, this is mandatory for STL licensing. Most councils require a minimum of £1m-£5m of cover.
In England and Wales, it is not legally required but operating without it is negligent. A single personal injury claim can easily exceed £50,000. Serious injuries run into hundreds of thousands.
4. Loss of income / business interruption
Covers the rental income you lose when you cannot let the property - because of insured damage, a major repair, or an insured event that makes the property uninhabitable.
This is the cover AirCover explicitly does not provide. If your property needs two weeks of work after a burst pipe, loss-of-income insurance compensates the bookings you had to cancel.
5. Employers' liability (if you have staff)
If you employ anyone - a cleaner, a maintenance person, a property manager - you are legally required to have employers' liability insurance (minimum £5m). This applies even if they work for you part-time or on a casual basis.
If you use self-employed contractors, you do not need employers' liability for them, but check that they have their own insurance.
Specialist STL insurers
Standard home insurance policies are designed for owner-occupiers. They do not cover short-term letting and will reject claims from STL use. You need a specialist policy.
UK insurers with STL-specific products include:
- Pikl - specialist short-term let insurance, covers Airbnb/VRBO/direct
- Guardhog - pay-per-night STL insurance, integrates with Airbnb calendar
- Proper - holiday let and STL insurance
- Boshers - holiday cottage insurance, long-established
- Towergate - commercial property insurance including STL
Get quotes from at least two. Policies vary significantly in what they cover, per-item limits, excess amounts, and whether they cover all booking channels or just named platforms.
What to check on any STL policy
Before you buy, confirm:
- All booking channels covered - Airbnb, VRBO, Booking.com, direct bookings, and any other channel you use
- Guest damage included - not just malicious damage but accidental damage (wine on the carpet, broken crockery, scratched furniture)
- Unoccupied periods covered - STL properties sit empty between bookings. Some policies have unoccupied property clauses that reduce cover after 30-60 days of vacancy
- Loss of income - included or available as an add-on
- Public liability minimum - at least £2m, ideally £5m. In Scotland, check your council's STL licence minimum
- Legal expenses - covers defence costs if a guest sues you
- Excess amount - what you pay per claim. A £500 excess on a £300 guest damage claim means you pay the full cost yourself
The security deposit question
Many hosts take a security deposit (via the platform or directly) to cover minor guest damage. This is reasonable but it has limits:
- Platform deposits are capped. Airbnb's damage deposit is not a cash hold - it is a claim process through AirCover. VRBO allows a configurable deposit but it goes through the platform
- Direct deposits need careful handling. If you take a deposit directly from a guest, you need clear terms and conditions, a defined process for deductions, and evidence (photos, receipts) to justify any claim
- Deposits do not replace insurance. A £200 deposit does not help with a £10,000 flood claim
Real examples of what can go wrong
These are the scenarios where platform guarantees fall short:
- Guest leaves the heating off in winter, pipes freeze and burst. Water damage to floors, walls, furniture. AirCover may cover the guest-caused element but will dispute whether "leaving the heating off" constitutes damage. Your buildings and contents insurance pays regardless
- Guest injures themselves on a loose step and sues for £30,000. AirCover liability coverage may apply, but you are relying on Airbnb to defend the claim. Your own public liability insurer appoints solicitors and manages the claim on your behalf
- A fire starts from a faulty appliance (not guest-caused). AirCover does not apply - it is not guest damage. Without buildings insurance, you are paying for the rebuild yourself
- Guest-caused damage means you cancel 3 future bookings. AirCover might pay for the damage repair. It will not compensate the £2,000 in lost bookings. Loss-of-income insurance does
How SelfLet Stays helps
SelfLet Stays tracks your insurance status as part of the STL compliance dashboard. Public liability and buildings/contents insurance are separate compliance items with expiry tracking and renewal reminders. You can upload your policy documents and see at a glance whether your cover is current - especially important at Scottish STL licence renewal when the council wants to see proof.