Airbnb, its hosts and the complex world of Insurer Of Last Resort

Unlike researching and booking an exotic trip, you receive neither the aspirational effect nor a dopamine rush when you research and purchase a travel insurance policy.

In short: nobody buys travel insurance because it’s fun!

NB: This is a viewpoint from Steve Sherlock, CEO of Pablow.

When you purchase travel insurance, you’re essentially transferring your underlying travel risk for a fee.

In the vacation rental market, particularly for owners and property managers of seasonal properties, the underlying risk for travel cancellations can take on a more visceral form (ie. a threat to livelihood) if the property manager is left holding the baby, so to speak.

Sometimes you just have to cancel

On a recent trip to Barcelona. I met with a vacation rental property manager who we’ll call Miguel.

Miguel had rented out a luxury beachside villa for two weeks during the peak summer season to a British guest who made the reservation through Airbnb.

Days before the guest’s stay, she informed Miguel that she could not travel due to an illness in the family.

Miguel informed the guest that per the super strict cancellation conditions, no refund was due and that there was not enough time to fill the reservation.

The guest cited that she had medical evidence that the cancellation was legitimate, but unfortunately Miguel was still not able to refund the guest.

The guest took the matter directly to Airbnb and, unbeknownst to Miguel, Airbnb enforced the force majeure clause (i.e. valid extenuating circumstance) in their terms and conditions, resulting in the guest receiving a refund and Miguel dealing with the hefty bill.

Unfortunately for Miguel he became what we’ve termed “The Insurer of Last Resort”…

Sherlock by name Sherlock by nature

After hearing Miguel’s story, I decided to do some of my own investigating and … his story checks out.

The Airbnb terms and conditions (i.e. a reason that allows a guest to avoid cancellation fees) are intriguingly similar to the coverage of a travel insurance policy.

See the below table which compares what Airbnb says could allow a guest to avoid cancellation fees and what a travel insurance policy covers.


We surveyed 500 vacation rental property managers and asked about the top three reasons their guests cancel, and unsurprisingly the top reason they gave matched the top loophole in Airbnb’s Force Majeure terms.

Our other findings revealed that employment related cancellations and weather or natural disaster related cancellations were also a very popular reason guests cancelled their trips.


Don’t get me wrong – I’m not an Airbnb opponent

I am probably one of the biggest users of Airbnb with 41 stays in ten countries, and 30 glowing reviews by hosts.

So, speaking from experience, if I cancel and don’t have travel insurance, I would not expect the host to be “The Insurer of Last Resort”.

That’s just not fair to hosts and I think Airbnb should move to address this for the sake of all concerned.

In our earlier example, if the client had taken out travel insurance, both the host and the guest could have transferred the risk to the insurance company, and both would be able to keep their money.

Instead, the Airbnb Force Majeure terms transfer all of the risk to the hosts, even though they expressly had “super strict cancellation conditions”. Go figure!

Who’s looking after the “little guys”?

In my mind, hearing Miguel’s story validates our approach to look after “the little guys” in the vacation rental market when it comes to travel insurance.

So that hosts can avoid the hassles we’ve had in the past of dealing with insurance companies, we created a simple process that enables hosts to offer their guests a travel cancellation option.

Therefore, if the guest declines the insurance, cancels their reservation and doesn’t want to honor the cancellation conditions, the host has a stronger case to make to credit card companies and Airbnb to avoid the chargebacks.

On the positive side, if the guest buys coverage and needs to cancel their reservation, then everyone wins!

I believe Airbnb is a fair-minded company, and I’ve seen Brian Chesky reach out on Twitter asking the community for ideas on how to improve their service.

This is a little longer than 140 characters, but alas my contribution to try and identify a potentially serious issue which viscerally affects the livelihood of Airbnb hosts who appear to have inadvertently become “The Insurers of Last Resort”.

NB: This is a viewpoint from Steve Sherlock, CEO of Pablow.

NB2: Rental apartment image via Pixabay.

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About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are those of the author. and do not necessarily reflect those of the author's employer, or tnooz and its partners.



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  1. diana giannoulis

    Yuri, agreed – perhaps airbnb should adopt the policy taken by UK tour operators who ask their clients when confirming their reservations, to tick a box, either to confirm that they will take out insurance with the tour operator, or that they have their own insurance, or as an alternative the ‘life happens’ . system. There is no sure fire way to protect ourselves as suppliers, but to make it obligatory for the guests to have some kind of cover is at least a step forward. We approx 100 guests per week in our various accommodations, and have often had clients cancel/curtail for valid reasons, and I simply provide them with any required contracts/receipts and they seek recompense from their insurance company, which as far as I am aware, they generally receive.

  2. Yuri

    There are way better modern solution than “insurance” to protect travelers from cancellation policies on the one hand, and secure the revenue of hosts/hotels on the other hand.
    Check out Life Happens for instance

  3. Brenda Hood

    One other point: in the midst of this incident, my credit card company urged me to introduce a signed contract — which I haven’t had to use for 10+ years, but the world is changing, so I’m working on them . . . but have been told that the electronic signed contracts may not really hold up in court. THEN, another property owner told me that she had a signed contract with cancellation policy clearly stated but the money was refunded to the guest anyway! Sure we could hire a lawyer, but they know we can’t afford that, so . . . We are in an untenable position. There seems to be no sure-fired way to protect ourselves.

  4. diana giannoulis

    My Russian guests had already arrived for 2 weeks in August They complained from the minute they got in the taxi at the airport -, didn’t like the roads/house/area/beach etc. We literally NEVER get complaints, have been in business for years with many repeat visitors, their complaints totally unfounded. Suddenly they told me wife was pregnant and they had to leave. Didn’t go to doctor here, didn’t consult anyone if she was actually fit to fly and left and then claimed holiday cost back from Airbnb who paid them without consulting me. Having worked in travel for 30 years my experience is that a) client with health problem consults doctor for advice/treatment & IF they are recommended to leave early, doctor issues a ‘fit to fly certificate’ and guests then claim on their insurance. However Airbnb didnt accept that, and billed me for all the costs on the ‘extenuating circumstances’ basis which is total rubbish. Clients wanted to leave and found a way…… I had quite a few properties on Airbnb, I have now cancelled my listings( I had 10 properties) and I will never advertise with them again. Homeaway etc. may have their failings but at least they are not so biased against owners, and I find it unbelievable that there is no appeals process with Airbnb.

    • Steve Sherlock

      wow Diana – what a story. I think Airbnb are learning and evolving – and stories like yours and Brandas and Miguels 😉 hopefully reach those in decision making position around this topic.

      I think what Airbnb need to do, is differentiate more between shared space vs. the whole space. The extenuating circumstance clause, if at all, is more applicable to shared spaces where the stays are much less expensive and often easier to fill for the host, than the whole space. Of the 42 Airbnb reservations I’ve made, only 3 were the whole space. So hopefully they create separate cancellation conditions for shared vs whole.

  5. Brenda Hood

    I recently had a similar situation. The guest found me via my website, but also mentioned seeing my property on vrbo. Because of the threat of Hurricane Matthew, the guest asked for permission to come in early for his stay. We accommodated him early, he arrived and only used two of the three apartments he had rented for three nights and departed before 8 am the next morning — asking via text if he could get a refund for the two nights he was not using. I explained that on both our website and on vrbo (where he said he also saw my property) we state clearly what our cancellation policy is and recommend that our guests purchase travel insurance. We offered him a return visit comparable to the unused portion of his original stay; he indicated that he would be in touch to book that. Later that day, our governor released a mandatory evacuation for the state and 52 hrs later the state was hit by the Hurricane Matthew. The guest appealed to his credit card company which initially had me jump through all kinds of hoops documenting my policies on-line, my communication (via text and email) with the guest, and my rationale for not refunding the guest’s stay. He again appealed; I again countered. In the end they refunded the ENTIRE amount to the guest (oblivious to the fact that he HAD stayed one night, which should have also included costs for cleaning — I do not offer nightly rates). When I asked how I could appeal this decision, I was told that there was no appeal process for me.

    • Steve Sherlock

      Brenda thanks for sharing that story. Last year we exhibited at the VRMA conference and hear a similar story from a whole bunch of PM’s – with at least 1/2 dozen asking for “chargeback” insurance, which is effectively what would have covered you in lieu of the guest buying travel insurance. So we are looking into this, though it’s not an easy underwriting risk to cover, hence we are trying to be creative in how we crack that nut.

  6. William Beckler

    This is a very insightful analysis.However, it sounds like you want Airbnb to reduce a benefit they are giving to guests so that you can then sell that same benefit to guests. I’m 100% sure that’s not going to happen. Why don’t you just try to sell that particular benefit to hosts, who are the ones who need it?

    • Steve Sherlock

      Thanks for your thoughts William. To me the crux of the matter is that; by Airbnb giving guest a way to avoid the cancellation conditions (via force majeure clause), the hosts are out of pocket each time.

      For example as a host you could have “Super Strict” cancellation policy, however this will not apply if the guest cancels due to a serious injury. To your other point, granted we are in the travel insurance business to sell policies – but whether we exist or not – this problem/loop hole for hosts still exists.


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