University of Maryland Francis King Carey School of Law Class of 2024
When Airbnb was founded in 2008, using the internet to rent out a room or a personal vacation property seemed like “‘a weird . . . crazy idea.’”[1] That is no longer the case. The immense popularity of online platforms that connect providers of products and services to consumers makes the Airbnb business model a win-win situation for hosts and guests. The former can receive significant supplemental income (according to the website, on average $9,000 per year[2]), and the latter can book vacation accommodations at prices cheaper than those offered by traditional hotels. Unfortunately, the relationship between a host and a guest can quickly deteriorate if either party breaks the trust required for the business models of platforms like Airbnb and Vrbo to succeed.[3]
This article addresses what both hosts and guests should know in case one party breaks the other’s trust through negligent or intentional acts that result in injury to person or property, including (1) common characteristics of vacation home rental agreements, (2) whether the host or rental platform may be liable for personal injuries, (3) insurance options for hosts and guests, and (4) the recourse available for guests in the event of worst-case scenarios.
Short-term rental platforms such as Airbnb and Vrbo have terms and conditions outlining mandatory rules for both hosts and guests.[4] Terms and conditions address such issues as booking rules, cancellation policies, and customer responsibilities. Examples of customer responsibilities include complying with applicable laws and treating others with respect.[5]
In addition to the standard terms and conditions that guests must adhere to, hosts are also entitled to present guests with additional rental agreements specific to their property.[6] Rental agreements are legally binding contracts whose contents are solely within the host’s discretion. Such contracts are particularly useful for properties with atypical amenities, like swimming pools.
Rental agreements can include terms such as house rules, occupancy limits, minimum and maximum stay requirements, limits on amenity usage, subletting prohibitions, indemnification clauses, and waivers of liability.[7] The use of rental agreements enforces the host’s house rules and provides transparency to both parties.[8] Both Airbnb and Vrbo only require a rental agreement to be disclosed before the guest books a listing and remind hosts that the platforms cannot enforce the agreements.[9] Additionally, guests are not obligated to sign them, although refusing to sign may mean that a guest will not be permitted to rent a listing.[10]
Before booking a listing, guests should be wary of rental agreements because hidden fees may be tacked onto these agreements. These include extra cleaning fees, security fees, surcharges for amenities, and occupancy violations.[11] If a host presents a guest with a rental agreement after a property is booked, the guest may decline to sign and ask the host to cancel the reservation. A guest’s safest measure is to review the rental contract terms within forty-eight hours of receipt,[12] preferably with an attorney.
If a guest is injured while utilizing the services of a short-term rental platform, he or she may wonder whether Airbnb or Vrbo is liable. Unfortunately, the guest will not have a viable tort claim against either of the rental platforms because of arbitration provisions in these platforms’ terms and conditions of use.[13] Both companies’ arbitration provisions encompass “any dispute” arising from the services of Airbnb and Vrbo.[14]
The arbitration provisions are considered “clickwrap agreements” because they “‘require users to affirmatively assent to the terms of use before they can access the website and its services.’”[15] In other words, guests must affirmatively assent to Airbnb and Vrbo’s terms by clicking a box labeled “I agree” before they can even view properties at their desired destinations.[16] Nevertheless, courts have found the arbitration provisions of both rental platforms enforceable.[17] Courts have stayed litigation against Airbnb and Vrbo in a variety of personal injury cases pending the outcome of mandatory arbitration pursuant to those provisions.[18]
Even claims against these platforms that are not subject to arbitration will likely fail. For example, in Carroll v. American Empire Surplus Lines Insurance Co., the plaintiff sued Airbnb for negligence after he was injured by a collapsing staircase at a rental property.[19] The plaintiff’s claim was not subject to the arbitration provision in Airbnb’s Terms of Service because he was not the guest who actually used Airbnb’s website to book the rental.[20] Rejecting his claim anyway, the court found that Airbnb did not exercise “direct control” over the hosts and their property.[21] Rather, “Airbnb was situated more like a travel agent, facilitating a transaction between the [hosts] and guests.”[22] As such, Airbnb had no duty to protect the plaintiff from the hosts’ negligence because the platform had no special relationship with the host or plaintiff.[23] Furthermore, Airbnb did not qualify as a custodian who had a duty to inspect the property and warn of dangerous conditions therein.[24]
Given the high probability that claims against a rental platform will be dismissed, any tort claim brought by a guest should be brought against the host as an ordinary negligence or premises liability claim.[25] In advance of litigation, each party should (1) collect photographic and video evidence of the conditions on the property that contributed to the injury, and (2) review their insurance options to avoid out-of-pocket expenses.
Prudent guests who wish to ensure a smooth vacation experience should consider purchasing traveler’s insurance, which is offered through both Airbnb and Vrbo. Both platforms’ insurance covers travel-related delays and costs but does not offer guests liability protection if their negligence causes damage to the host’s property. Airbnb guests automatically receive free “AirCover” when they book a listing through Airbnb.[26] “AirCover” offers guests a “booking protection guarantee[,]” a “check-in guarantee[,]” and a “get what you booked guarantee.”[27] If the host violates one of these guarantees, the guest may receive a full or partial refund, or can book another property where a host cancels a booking.[28]
In addition to “AirCover’s” free coverage, Airbnb also offers a for-cost traveler’s insurance which will pay guests up to 100% of Airbnb booking costs when those guests cancel for “covered” reasons.[29] These reasons include: (1) trip cancellation, (2) travel delay, (3) medical assistance, (4) luggage, and (5) emergency and travel assistance services.[30] Guests should be aware that because this insurance is optional, it will not appear in the property’s listing price and instead will show up as an additional charge at the time of booking.
Vrbo’s traveler’s insurance is known as the Travel Protection Plan (“The Plan”).[31] The Plan provides refunds to guests whose payments inadvertently land in a third party’s possession and offers assistance from experts if a host cancels a booking. Furthermore, it may reimburse other out-of-pocket expenses and related fees associated with the booking. The Plan generally covers cancellations due to (1) illness, (2) injury, (3) weather-related conditions, (4) visa or passport theft, and (5) involuntary loss of employment.[32] The Plan can be purchased through Vrbo or its insurance carrier.[33] Like Airbnb, the cost of the plan will not be included in the listing price. Consequently, a shrewd guest should take note that when contemplating whether to purchase traveler’s insurance through Vrbo, the listing price is subject to increase.
Prudent guests should also consider obtaining personal liability insurance for property damage they may cause while occupying a vacation rental property through Airbnb and Vrbo. As mentioned above, property damage claims against guests are not covered by the platform’s free or for-cost traveler’s insurance, but both platforms offer guests the option to purchase additional liability insurance. Airbnb provides this through “AirCover for Hosts,” which will be discussed below. In like manner, guests renting through Vrbo can also purchase their own personal liability insurance, known as the “Accidental Damage Protection Plan.”[34] This plan covers any accidental damage that a guest may cause. It also compensates guests where hosts fail to return a damage deposit.
Before entering the rental home business, potential hosts seeking to use Airbnb and Vrbo should review their local ordinances, covenants, lease agreements, and homeowners’ association rules to understand any exclusions or limitations on the contemplated rental activity.[35] Failure to do so could have serious consequences if a rental is not permitted.
For example, a condominium unit owner in Illinois rented out her home through Airbnb despite her condominium’s Association barring such action.[36] She subsequently pursued a claim against the Association for barring her business operation.[37] Her claim was dismissed because her rentals constituted “business” activities, which were expressly forbidden to occur on the condominium’s premises as stated in her Association’s Declaration.[38] Similarly, an Illinois court held that a host’s short-term rental was a commercial activity banned explicitly in the local zoning ordinance because the host provided its properties for residential use in exchange for payment.[39]
Assuming renting one’s home is permitted under local laws and regulations, any host who wishes to rent their property needs to consider how to protect the property from damage, and themselves from personal liability if a guest is harmed while using the rental property. Of course, this means having adequate insurance coverage. For hosts, personal insurance can take the form of homeowners’ insurance or vacation property insurance.
Many traditional homeowners’ insurance policies do not permit a homeowner to engage in home-sharing, and, as such, these policies will not cover personal injuries that occur on the property while the host is renting it out through Airbnb or Vrbo.[40] Thus, hosts might also wish to purchase specific vacation property insurance that encompasses the following: (1) loss of income due to unforeseen circumstances; (2) personal property damage; (3) personal liability claims against hosts; (4) location hazards related to acts of nature; (5) no forced entry requirements for damage or theft; (6) and pets.[41]
In addition to personal homeowners’ insurance, both Airbnb and Vrbo offer hosts built-in options for liability insurance resulting from their vacation properties. Airbnb provides coverage for hosts through an insurance policy known as “AirCover for Hosts.”[42] This insurance is included with every listing at no additional cost.[43] “AirCover for Hosts” provides $1M of coverage per stay for personal injuries that guests suffer because of dangerous conditions on the host’s property. The policy also provides $3M in coverage for damage a guest may accidentally cause to the host’s property.
Like Airbnb, Vrbo also provides insurance for hosts at no additional cost.[44] The insurance offers $1M of coverage per property per year. Vrbo’s insurance coverage is limited to a guest or third-party’s bodily injuries and third-party property damage. However, Vrbo requires hosts to have their own suitable insurance before hosting a property.[45] Should the host’s insurance not contribute to satisfying a claim, Vrbo will turn to the host to pay a 25% deductible before its coverage kicks in.[46]
Both hosts and guests should note that the automatic liability insurance provided by Airbnb and Vrbo excludes multiple injuries from coverage.[47] Examples of excluded injuries include assault or battery committed by the host or other insured, injuries related to the use of watercrafts, and injuries caused by exposure to bacteria, fungi, or pollution. A prudent host should review all of the available insurance with his or her agent to make sure that all damage and liability scenarios are adequately covered.
Guests may experience worst-case scenarios when the host or other third party engages in intentional misconduct. For example, a host may install hidden cameras at a rental property even though Airbnb and Vrbo specifically circumscribe permissible locations for recording devices through surveillance policies.[48] The former platform permits hosts to place recording devices in “public spaces” like the front door or driveway, and in “common space[s] that are clearly identified and disclosed ahead of a reservation.”[49] By contrast, Vrbo does not permit hosts to place recording devices inside the property at all.[50] Both platforms prohibit hosts from monitoring areas where “guests have a reasonable expectation of privacy,”[51] such as bedrooms and bathrooms.
The legal recourse against Airbnb or Vrbo in worst-case scenarios like this one might be limited by the same defenses related to arbitration provisions and lack of control discussed above. In Airbnb, Inc. v. Doe, the plaintiffs sued Airbnb for “‘constructive intrusion’” and loss of consortium when they discovered that their host used hidden cameras to record “private” moments of their stay.[52] The plaintiffs alleged that Airbnb “‘failed to ensure that [the rental] property did not contain electronic recording devices.’”[53] The Florida Supreme Court never reached the merits of these claims, holding that an arbitrator would have to decide whether the claims were subject to the arbitration agreement in Airbnb’s Terms of Service.[54] Similarly, courts have held that Airbnb did not exercise enough control over rental properties to be liable for a fatal shooting[55] or a violent home invasion.[56]
Worst-case scenarios arising from misinformation on a listing can be resolved through a much less formal process than lawsuits or arbitration. Both Airbnb and Vrbo instruct guests facing this scenario to request a refund from the host.[57] Airbnb additionally allows guests to file a “rebooking assistance or . . . refund” claim with the platform within seventy-two hours of discovering the listing’s inadequacy.[58] Similarly, Vrbo will furnish the appropriate accommodations so long as the report is issued within twelve hours of the guest’s arrival.[59]
Safe to say, in 2023, the short-term rental business model has been a huge success. Before booking, hosts and guests should be aware of rental agreements. These contracts are beneficial for hosts but can hurt guests through hidden fees or other unique terms. Both parties want a safe and happy experience, but sometimes accidents are inevitable. Guests injured during their stay at an Airbnb or Vrbo property can file a premises liability claim against the host. Although Airbnb and Vrbo offer liability insurance options for hosts and guests, that insurance excludes multiple scenarios from coverage. Therefore, hosts and guests should both procure some type of personal insurance. Lastly, guests can resolve worst-case scenarios by speaking directly to the host, or by reporting such issues to the short-term rental platform. In extreme situations, guests should speak to an attorney about potential arbitration or litigation.
Hannah Cybart is originally from Buffalo, New York. In 2021, she received a Bachelor's of Science in Biology and a Bachelor's of Arts in Political Science from Houghton University. Hannah is currently a J.D. candidate at the University of Maryland Francis King Carey School of Law where she serves as an Articles Editor on the Journal of Health Care Law and Policy.
Adrian Kibuuka was born in Uganda. He spent the early years of his life there before moving to the United States of America. Since moving, Adrian has settled in Maryland where he earned his Law and American Civilization undergraduate degree at Towson University. Adrian is currently a 2024 J.D. Candidate at the University of Maryland Francis King Carey School of Law. As part of his law school journey, he is part of the Maryland Law Review and Moot Court Board.
Id. at 772–73; see also Terms of Service, supra note 4 (stating that Airbnb does “not own, control, offer or manage any Listings” on their website).
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