Regulators at the Virginia Bureau of Insurance are raising issues with Airbnb over its Host Damage Protection (HDP) program, maintaining that it is an insurance product and Airbnb is offering it without being properly licensed.
The State Corporations Commission has given Airbnb until July 31, 2026 to respond either by negotiating a settlement or by agreeing to defend itself at a hearing starting December 14, 2026.
The state of Washington raised similar concerns a few years ago. Airbnb has long argued that the HDP is a guarantee and not an insurance product and the terms on its website state that.
Airbnb markets HDP to those in Virginia who list their own property for short or long-term stays through its platform. Through HDP, Airbnb promises to indemnify these hosts up to $3 million for property damage, cleaning expenses, and lost income resulting from guest conduct during stays booked through the Airbnb platform. However, Airbnb’s HDP will compensate a host for damage only if and when the responsible guest fails to do so as required under its contract.
The Virginia insurance regulator says that by offering HDP, Airbnb has violated the state’s insurance code by transacting the business of insurance without first obtaining a license and a certificate of authority.
The bureau notes that unlike Airbnb’s $1 million Host Liability Insurance (HLI) program that is underwritten by a licensed insurance carrier, the HDP $3 million program is not underwritten by a licensed insurance company. Instead, Airbnb bears the legal and financial risk of HDP by self-funding and administering HDP.
The Virginia regulator asserts that HDP is an insurance product because Airbnb has undertaken, by contract, to indemnify hosts for up to $3 million for contingent, covered losses, including physical damage to property, extraordinary cleaning costs, and lost booking income, thereby shifting the resulting financial risk for such damage from hosts to Airbnb.
Furthermore, the bureau argues that Airbnb assumes full control of the claims process. It outlines the requirements and process for recovery, reviews the submission, weighs the sufficiency of proof, and determines whether reimbursement will be issued and in what amount. “In doing so, Airbnb functions in the dual role typically occupied by an insurer and its adjusters, both evaluating the legitimacy of the claim and setting the amount of financial reimbursement,” according to the bureau.
Virginia regulators want Airbnb to pay fines and halt the HDP offering in the state until and unless it becomes licensed as an insurer or engages a carrier to underwrite HDP.
After raising similar concerns, the state of Washington in 2023 required Airbnb to secure a surplus lines policy through a broker licensed in the state. The HDP terms online now include a special note to Washington hosts that all amounts payable under HDP are secured by an insurance policy. The state also fined Airbnb $20,000 and required it to review all past claims for any improper denials and use a Washington licensed adjuster for all future claims.
The Airbnb website does state that HDP is not insurance or an offer to insure and does not take the place of insurance obtained or obtainable by hosts. Furthermore, the terms state that HDP is not a tenant’s or homeowners residential insurance contract or an insurance service agreement for another line of business.
“To the extent you desire protection beyond Host Damage Protection, we strongly encourage you to purchase insurance that will cover you and your property for losses caused by Guests or Invitees that do not constitute HDP Losses,” the website advises.
The online terms also include a special note to Arkansas users that Airbnb’s “obligations under this online marketplace guarantee are not covered under a reimbursement insurance policy and are backed only” by Airbnb.
In June, Airbnb introduced yet another insurance plan, Earnings Protection, which hosts can purchase to provide supplemental income when external factors like severe weather or property damage interrupt their ability to welcome guests and earn income. This earnings protection plan is provided by MIC Global, a digital Lloyd’s insurer known for its embedded products and use of parametrics.
Topics
Virginia
Sharing Economy
Interested in Sharing Economy?
Get automatic alerts for this topic.
