What Airbnb's AirCover actually covers (and the gaps Bay Area STR hosts are filling in 2026)

I had a host call me last fall about a guest who started a small kitchen grease fire in her Sunnyvale rental. Damage was modest — about $14,000 to repair the cabinet faces, the cooktop, and some smoke staining on the ceiling. She filed with Airbnb. They paid out $9,200. The remaining $4,800 she wrote a check for, because her homeowner policy specifically excluded short-term rental activity, and she'd never gotten around to picking up a dedicated STR policy.

I've been hosting and managing short-term rentals across the South Bay for 12 years. 1,016 reviews on Airbnb, 4.83 stars, Superhost. I see two or three of these conversations a year. Almost always the host assumed Airbnb's coverage was the whole package, and almost always the gap they discover is bigger than they expected.

This post is the one I wish someone had handed me when I started. What AirCover actually covers, what it doesn't, what Vrbo and Booking.com look like by comparison, and what specialty STR insurance products are worth the spend in the Bay Area in 2026.

What AirCover actually is

Airbnb rebranded its protections into a single product called AirCover in 2021 and refined it a few times since. The headline numbers, current as of spring 2026:

• $3 million in property damage protection per booking
• $1 million in host liability protection per booking
• Up to $1 million for guest injury liability and resulting medical, depending on jurisdiction

That sounds like a lot. The exclusions are where the picture changes:

Loss of income. If your unit is unrentable for two months while the floor gets replaced, AirCover doesn't pay your lost bookings.

Wear and tear, gradual damage. Anything that can be argued as "this was already deteriorating" is a tough claim. Bedbug remediation. Persistent water damage that wasn't an immediate event. Pet stains that built up over multiple stays.

Damage to property outside the listing. A guest's car backs into your neighbor's mailbox, a guest's plus-one falls down the stairs in the apartment building common area — that's a different conversation than your own unit.

Host negligence claims. If a guest argues you knew about a defective deck railing and rented anyway, AirCover's not going to defend that. You're getting sued.

Replacement value vs. actual cash value. AirCover pays based on a depreciation schedule on contents. The 8-year-old leather sofa you paid $4,200 for might pay out at $1,100 if it's totaled.

Resolution center first. AirCover sits behind the guest resolution process. If the guest disputes the claim, you're often in a 30-90 day back-and-forth before AirCover even kicks in.

I've seen all of these cause real losses. The product is real. It's just not "homeowner insurance for short-term rentals," which is what most hosts treat it as.

What Vrbo and Booking.com offer

For hosts running on multiple platforms (which most South Bay STR hosts I work with are):

Vrbo Liability Insurance, operated by Generali, provides up to $1 million in liability coverage per booking. No property damage coverage from Vrbo itself; you're relying on either your own policy or a damage deposit collected through the platform. This was streamlined in 2024 and now covers most U.S. rentals automatically.

Booking.com provides limited liability coverage by region; in the U.S. it's roughly $1 million per booking for hosts signed up to Booking's "partner liability program," which is opt-in. Property damage is on you.

If you're running on Furnished Finder for medium-term stays (30+ days), they offer no insurance at all. The platform is a directory; insurance is the host's responsibility. That matters for the segment of South Bay hosts who've shifted toward 30+ day medium-term rentals after California's STR data sharing law SB 346 went live and city-by-city registration enforcement tightened.

So if you're cross-listing across all three platforms (which I usually recommend), the platform-provided insurance picture varies by booking. Your own policy is the only thing consistent across every guest.

Why your homeowner policy doesn't actually cover STR

The big one. Almost every standard homeowner insurance policy excludes "business activity" on the property, and the carrier interprets short-term rental as business activity. Some carriers specifically write in an STR exclusion. Some try to argue it after a claim. Either way, the moment you start renting on Airbnb, you've effectively voided your homeowner coverage for that part of the property unless you've added an endorsement or moved to a dedicated STR policy.

What I see hosts get wrong:

"My carrier said they cover up to 14 days of rental a year." Some do. None cover 200 nights a year. If you're an active host, the homeowner endorsement isn't enough.

"I have an LLC, so my homeowner doesn't matter." The LLC doesn't help unless the property is actually titled to the LLC and the LLC has its own commercial policy. Most hosts I work with have a personal-name title and the LLC is just a passthrough for income, which means the homeowner policy is still the primary instrument.

"I'm grandfathered in." Carriers reassess at renewal. State Farm and Farmers in particular have been auditing for STR activity in 2024-2026, especially after wildfire claims pushed underwriting reviews wider. If you're hosting and your carrier doesn't know, they might know after the next claim. Bad time to learn.

Specialty STR insurance options working in the Bay Area

Three carriers do most of the volume in the dedicated STR space. I've worked with hosts on each:

Proper Insurance is the largest and most comprehensive. Their commercial policy covers building, contents, business interruption (loss of rental income), premises liability, and host liability. Annual premium for a typical 1BR Bay Area STR runs $2,400 to $3,800. For 2BR/3BR larger properties, $3,500 to $5,500. They handle the most complex claims and have the deepest STR expertise. Downside: premiums are toward the top end, and underwriting is strict — they require certain safety features (smoke detectors, fire extinguishers, GFCI outlets) and may inspect.

Steadily is newer (founded 2020), targets the rental property market broadly, and does both long-term landlord policies and STR. Pricing tends to be 15-25% under Proper for similar coverage. Claim-handling reputation is improving but historically less established. Typical 1BR Bay Area STR: $1,800-2,800.

Slice offers on-demand STR insurance, billed per night. Useful for hosts who only rent occasionally — a few weekends a year for a major event. Not the right answer for full-time hosting; per-night cost adds up quickly above 50-60 nights.

A handful of regional brokers (CBIZ, NREIG, RentalGuardian) also write STR-specific policies, often in partnership with the bigger carriers. If your portfolio includes more than two or three properties, talking to a broker who shops multiple carriers is usually the right move.

What good STR coverage actually includes

The checklist for evaluating an STR policy:

Building coverage at replacement cost. Bay Area replacement cost for a typical 1BR condo is running $400-650 per square foot in 2026 because of construction labor costs. Your policy limit needs to match.

Contents coverage. A furnished STR has $30,000-80,000 in furniture, electronics, kitchen equipment, art, and decor. Most homeowner policies cover contents at a percentage of dwelling, not a separate line item. STR policies should be specific.

Business interruption / loss of rental income. This is the big one. If your unit's unrentable for 90 days while you fix flood damage, you lose $20,000-50,000 in income on top of the repair cost. A real STR policy should cover that.

Premises liability ($1M-2M). A guest slips on your stairs, breaks an ankle, and sues. Legal defense alone runs $30,000-80,000 before any settlement.

Host liability. Distinct from premises. Covers things like guest identity theft from a stolen package, defamation, or a guest claiming they were harmed by an action you took (like cancelling their booking).

Bedbug, vermin, and biohazard remediation. Most homeowner policies exclude these. STR policies often include them as a small line item ($5,000-25,000), and you'll be glad they did the first time it happens.

Identity theft / tenant fraud coverage. Recent addition by some STR carriers. Covers losses when a guest uses fake ID to book and then steals or damages property under that fake identity.

What this actually costs in the Bay Area

Real numbers from clients across San Jose, Mountain View, Sunnyvale, Cupertino, Palo Alto, and Santa Clara as of April 2026:

Pricing assumes the property's in a non-fire-zone for the most part. Properties in the wildfire-exposed parts of Los Gatos, Saratoga hills, and the east San Jose foothills are running 30-60% above these numbers, mirroring what I've watched on the Peninsula luxury side over the last 18 months.

For most South Bay hosts running 200+ nights a year, $3,000 a year for proper coverage is roughly 1.5-2.5% of gross revenue. Not nothing, but not the line item that makes or breaks your STR economics. Compared to the $14,000 grease fire I started this post with, it's an obvious trade.

Workers comp: the line item nobody talks about

If you have a cleaner who comes regularly to your STR, California labor law treats them as either an independent contractor or your employee. The default presumption in California is employee unless you can pass the ABC test under AB 5. For most STR hosts, the cleaner doesn't pass the ABC test — they don't have their own business, they work specifically for you, they're not bringing their own equipment.

Which means if your cleaner gets hurt at your property, you're liable for workers comp. If you don't have workers comp insurance, that's a personal-pocket liability event that can run six figures for a serious injury.

The fix: hire your cleaner through a cleaning company that has its own workers comp (they're contractors of the company, not yours), or carry a workers comp policy that covers domestic and property workers. The latter runs $400-1,200 a year depending on the size of your property and the hours.

This is the gap I see most often when I do an insurance review for a host. They've got everything else dialed in. Workers comp gets missed because it's not in any STR insurance product by default. A good cohost partnership usually addresses this on the cleaner side because the cleaning team works for the management company, not for you.

What to do this month

If you're hosting on the platforms in 2026 and your insurance is still your homeowner policy: - Stop. Call a broker this week - Get a quote from Proper or Steadily for your property - Compare it against the homeowner premium you're paying now plus the gap

If you have an STR policy already: - Confirm your dwelling coverage matches current Bay Area replacement cost (it's gone up 15-25% since 2023) - Verify business interruption is on the policy and the limit is realistic - Check workers comp specifically

If you're managing multiple STR properties: - Talk to a broker about a portfolio policy (often 10-20% cheaper than per-property policies bundled) - Consider an umbrella policy on top of the primary STR policies for $5M-10M aggregate liability

Insurance isn't the most exciting part of STR operations. It's the part that matters the day something goes wrong, and almost everything else you do as a host won't matter if the insurance underneath isn't right.

If you operate a short-term rental in the South Bay and want a second set of eyes on your insurance setup, request a free rental analysis and I'll walk through what I'm seeing across my portfolio. Or call me at (408) 813-8001.

Sources

• AirCover for Hosts — Airbnb
• Vrbo Liability Insurance — Vrbo
• Proper Insurance for Short-Term Rentals — Proper Insurance
• Steadily Landlord and Short-Term Rental Insurance — Steadily
• California AB 5 Worker Classification — California Department of Industrial Relations
• California Department of Insurance — Short-Term Rentals — California Department of Insurance
• Short-Term Rental Insurance Buyer's Guide — AirDNA