Across the U.S., new options continue to emerge that provide ways for people to share cars, homes, and other products or services, commonly referred to as the “sharing economy”. Airbnb is a platform that connects those seeking a place to stay with those interested in renting their home or a room. This “house-sharing” model allows those with space to post their availability for primarily short-term rentals. The company has experienced tremendous success in only 10 years, expanding to 65,000 cities internationally and now reportedly facilitates over $5 billion in annual rental bookings. Here, we look at potential problems stemming from liability for injuries that may occur at these rentals.
The fundamentals of premises liability, which exists in most states, is those who own or control the activity on a property, may be liable for injuries that occur to others on their land. This is based on a “duty to care” that landowners owe to protect visitors from potentially dangerous conditions. If the property owner is aware (or should be) of a hazard, they must protect or warn visitors or be potentially liable for injuries. Examples of such conditions include slippery floors, ice accumulation in the entry area, poor lighting, exposed electrical wires, or aggressive dogs on the property.
Hotels maintain liability insurance in case a guest is injured from an unexpected condition or maintenance-related failure. With Airbnb, this liability potentially rests with the homeowner or occupier, Airbnb, or a property landlord based on the circumstances. Residential property owners generally have homeowner's insurance for potential accidents; however, many insurers have terms in the agreement specifying that coverage is not intended for injuries associated with business or profit-based activities conducted in the residence. Residential property owners using their homes for more traditional businesses such as bed-and-breakfasts would likely have separate insurance designated for their business. Airbnb offers their Host Protection Insurance Program which provides $1 million in coverage to rental hosts in the event of personal or bodily injuries. There may be rare circumstances where Airbnb could be potentially liable—though unlikely.
Operations like Airbnb have gotten the attention of some members of the Maryland legislature. A proposed bill in the Maryland State Senate #463 titled “Business Regulation - Limited Residential Lodging” seeks to regulate home-sharing through potential license requirements, tax enforcement, and provisions to prevent discrimination. This would apply to those offering residential lodging “through a hosting platform”. Locally, only a few cities have provisions that regulate shorter-term rentals including Annapolis, Easton, and Ocean City.
Thus far, Airbnb has had an excellent track record in terms of accident related injuries and fatalities. They completed close to 2 million bookings before a host reported a property damage claim and their claim rate is said to be .01%. Several publicized filed claims for coverage showed that Airbnb's claims team responded in a “freakishly fast” manner to resolve the matter.