This article in the New York Times is a good write up of one of the big problems with renting your home on AIRBNB or similar services (including Craigslist).
It seemed pretty obvious to me that you don’t have insurance from your regular homeowner’s policy when you rent your home out as a hotel. On this point insurance companies are justified in that the risks of insuring a hotel are clearly different than an owner occupied residence. A homeowner’s policy doesn’t cover when you have long term tenants either. The risks are large and I have seen clients with substantial losses for this type of business.
It should be noted that the premiums mentioned inn the article don’t seem huge. $3,000 for a million dollar home is not a huge increase over the typical price of a homeowner’s policy.
One of the issues being ignored by people in these circumstances is that the law generally treats consumers better than businesses and attempts to place liability on those who can afford to bear it. This is true formally and informally in various situations. When individuals not used to operating a business start seeing liability they won’t really understand what has changed. Worse, they can be bankrupted and everyone can lose.
It should be noted that renting your house as a hotel is illegal in most places, and before starting an AIRBNB business, one should consult am Attorney to understand all the legal issues attendant to such a business.