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December 20, 2018

Airbnb and rentals – what happens if someone gets injured?

Airbnb has exploded in popularity in Australia, where even a small country town can have nearly 100 listings. This has brought with it great benefits for both property owners and people looking for a place to stay. Unfortunately, as with most parts of life, there is always the chance that something goes wrong and legal trouble ensues. In this blog, I look at what happens if someone gets injured on an Airbnb property and more broadly, a rental property.

Injury and even death has occurred recently on Airbnb properties in Australia. Legal action will likely (and rightly) follow some of these incidents. Hosts need to remember that their property must be safe for people to use and enjoy, and guests need to know that they may have legal options if an injury or death was caused by an unsafe home or equipment.

What protection does Airbnb offer?

The Wrongs Act is the law that governs these types of injuries in Victoria. While there are limits on the amounts payable under the Wrongs Act scheme, potentially a claim could exceed the coverage that Airbnb provides. Airbnb hosting comes with insurance that can cover $1 million US in damages, which at the time of writing is roughly the equivalent of $1.4 million Australian dollars.

It’s likely that most cases would not reach such a high amount. However, in the case of catastrophic injury or where a very high earner is involved in the accident, there is potential for large awards of damages. If there is inadequate insurance, then this can have serious flow-on effects for both the injured person and the host.

Firstly, for the injured person, they may have difficulty in recouping any judgement or settlement they reach from the property owner. For example, someone became a paraplegic after falling from an unsafe balcony and was unable to work again and obtained a settlement of $2 million dollars representing pain and suffering and economic loss. The Airbnb insurance would only cover 70% or so of the settlement, leaving $600,000 unaccounted for.

Conversely, for the owner, they are looking at having to pay $600,000 out of their own pocket.

The next step would be to look at whether any other insurance policy is in place to cover the remaining amounts. Most people know that a home and contents insurance policy covers some instances of injury on their property. For example, if you invite friends over to visit and there is an injury and legal action, the home and contents policy will likely cover it. However, when the relationship becomes more of a business one, such as renting through Airbnb, your insurance may well not cover any injuries sustained by Airbnb guests.

What precautions can you put in place before renting on Airbnb?

Given this is the case, if you are using Airbnb or a similar platform, it is really important to make enquiries with your home and contents insurer about whether you would be covered in those circumstances. If you’re not covered, you should seriously consider taking out additional insurance.

With a more traditional long-term rental situation, generally adequate insurance for injuries is in place and the issues referred to above won’t be a problem. What I do suggest though for anyone about to rent a property and become a tenant is to carefully examine the rental agreement. There is potential for renters to be drawn into cases where someone is injured on the rental property. It pays to have advice before signing an agreement if you’re not sure about liability, or considering taking out your own insurance, particularly if it’s a property where its more likely an accident could occur – for example, if there are dams on the property, a pool, cliffs, animals or multiple stories.