Top TLDR:

Airbnb insurance options for Austin hosts go well beyond AirCover — which has significant gaps — and require a purpose-built STR policy, landlord policy with STR riders, or commercial coverage to fully protect your property, liability, and rental income. Austin's STR license requires proof of current liability insurance before issuance, making the right coverage a legal prerequisite, not just a financial safeguard. Start by requesting a declarations page review from an STR-experienced insurance broker to identify exactly what your current policy does and doesn't cover.

Insurance is the coverage gap most Austin Airbnb hosts don't discover until something goes wrong. A guest slips on a wet deck. A pipe bursts during a booking. A party causes $15,000 in damage that AirCover declines to cover because the host didn't follow a specific documentation process. These aren't edge cases — they're the scenarios that prompt hosts to read their policy for the first time, only to find it doesn't apply.

Austin's short-term rental market moves fast, and the city's licensing requirements add a compliance dimension that makes proper insurance non-negotiable. The City of Austin requires proof of current liability insurance as part of the STR license application. What the city doesn't specify is what "adequate" coverage looks like — and that's where hosts are left to figure things out on their own.

This guide compares every major Airbnb insurance option available to Austin hosts, from Airbnb's built-in AirCover program to purpose-built STR policies, so you can make an informed decision about what your property actually needs.

For hosts who want expert guidance built into their management relationship, Sora Stays' Austin property management service helps owners understand their coverage requirements as part of the onboarding process — before the first guest books.

Why Standard Homeowners Insurance Isn't Enough

The most common and costly insurance assumption Austin Airbnb hosts make is that their existing homeowners policy covers short-term rental activity. In the vast majority of cases, it doesn't — and the reason is straightforward.

Standard homeowners insurance is underwritten for owner-occupied residential use. When you introduce paying guests — even occasionally — you're operating a commercial hospitality business out of a residential property. Most homeowners policies either explicitly exclude STR activity or contain clauses that allow the insurer to deny claims arising from commercial use. Some policies will cancel coverage entirely if they discover the property has been used as an STR without disclosure.

The practical result: if a guest is injured at your property during a booking, if a guest causes significant structural damage, or if a fire occurs while guests are in residence, your homeowners claim may be denied. At that point, you're personally liable for costs that can run into hundreds of thousands of dollars.

The only way to know where your current homeowners policy stands is to read it carefully and confirm with your insurer — not assume. This is the starting point for every Austin host evaluating their coverage.

Airbnb AirCover: What It Actually Covers

Airbnb introduced AirCover as a host protection program that provides liability coverage up to $1 million and damage coverage up to $3 million per occurrence. On paper, those numbers sound comprehensive. In practice, AirCover has limitations that every Austin host should understand before treating it as their primary coverage.

What AirCover covers: Guest-caused property damage, including furniture, fixtures, and personal belongings; liability for third-party bodily injury or property damage related to a booking; damage from pets brought by guests.

What AirCover doesn't cover: Damage caused by normal wear and tear; losses not reported within a specific timeframe after checkout; disputes where documentation is insufficient or delayed; cash, securities, and collectibles; vehicles and watercraft on the property; damage that occurs between bookings, during owner use, or from non-Airbnb sources; loss of income during extended repairs. AirCover also does not cover liability claims that arise outside the direct context of a booking — meaning neighbor disputes, property access issues, or incidents during owner-managed periods fall outside its scope.

The documentation requirement is strict. To file an AirCover damage claim, hosts must submit itemized documentation within 14 days of checkout. Hosts who don't photograph damage immediately, obtain repair estimates promptly, and submit within the window can find their claims denied on procedural grounds regardless of the damage's legitimacy.

AirCover is a meaningful supplement to proper coverage. It is not a substitute for it. Austin hosts who rely on AirCover as their only protection are exposed in ways they likely don't realize until it's too late.

STR-Specific Insurance Policies: The Purpose-Built Option

Short-term rental insurance is a growing product category, and several insurers now offer policies designed specifically for hosts who list on Airbnb, Vrbo, and similar platforms. These policies are built around the risks of the STR operating model — rotating guests, variable occupancy, liability during bookings, and the gap periods between commercial use and personal use.

The major providers in this space include Proper Insurance (one of the most widely used for STR hosts), Slice Insurance, Foremost, and CBIZ. Here's what to look for in an STR-specific policy:

Commercial liability coverage of at least $1 million per occurrence, covering guest injuries, property damage caused by guests to third parties, and host liability for incidents on the property during bookings.

Building and contents coverage that applies during active rentals, between bookings, and during owner-occupied periods — with no exclusion for STR activity as the triggering event.

Loss of income coverage for periods when your property cannot be rented due to covered damage. For Austin hosts who depend on STR revenue, a policy that covers rental income during an extended repair is financially critical.

Guest medical coverage that pays for guest injuries regardless of fault — which reduces the likelihood of a liability claim and covers immediate medical costs without litigation.

No occupancy restrictions — some standard policies won't pay if the property was occupied by a paying guest at the time of loss. STR-specific policies are written to cover exactly those circumstances.

STR-specific policies typically cost between $1,500 and $3,000 annually depending on property size, value, Austin's local risk profile, and coverage limits selected. That cost is a line item in your operating budget — and it's substantially less than the cost of an uninsured claim.

Landlord Insurance With STR Riders: The Hybrid Option

Some hosts — particularly those who also rent their properties on a long-term basis or who have mixed-use situations — find that a landlord insurance policy with a short-term rental endorsement or rider is the right fit.

Landlord policies are written for non-owner-occupied properties being rented to tenants. They cover the structure, liability, and loss of rental income. Adding an STR rider extends that coverage to short-term rental scenarios, acknowledging the rotating guest model and adjusting terms accordingly.

This approach works well for Austin investment property owners who want a single policy covering both long-term and short-term rental periods rather than maintaining separate policies. The key question is whether the insurer's definition of "short-term rental activity" in the rider matches your actual operating model — including the platforms you use, the booking lengths you accept, and the frequency of guest turnover.

Not all landlord insurers offer STR riders, and those that do vary significantly in what the rider covers. Confirm the following before purchasing: Does the rider cover Airbnb and Vrbo bookings specifically? Does liability coverage extend to guest injuries during bookings? Is loss of rental income included? Are there occupancy thresholds that would void coverage?

Commercial Property Insurance: When It Makes Sense

For Austin hosts with high-value properties — particularly luxury homes in Westlake Hills, Lake Travis estates, or upscale East Austin properties — a commercial property insurance policy may provide the most comprehensive protection.

Commercial policies are written for business-use properties and don't carry the residential occupancy assumptions that create gaps in homeowners and landlord policies. They can be structured to cover higher replacement values, business interruption income, commercial liability at higher limits, and specialized coverage for high-value contents.

The tradeoff is cost. Commercial property insurance is generally the most expensive option for STR hosts, and for many Austin properties, a well-structured STR-specific policy provides comparable protection at lower cost. But for hosts managing multiple properties or operating at the luxury end of Austin's market, commercial coverage is worth evaluating alongside the alternatives.

What Austin's STR License Requirement Actually Means for Coverage

The City of Austin requires proof of current liability insurance as a condition of STR license issuance. This is one of the required documents in the application package alongside your floor plan, proof of ownership, and the $500 application fee.

The city does not specify a minimum coverage amount, a required policy type, or a list of approved insurers. It requires evidence that liability coverage exists. The practical implication is that any policy you present must explicitly cover short-term rental activity — a standard homeowners declarations page that doesn't address STR use will not satisfy this requirement in a meaningful compliance sense, even if the city accepts it on paperwork.

Getting this right from the start is important because your license, your coverage, and your operating compliance are all interconnected. For the full picture of how insurance fits into Austin's STR compliance framework, the Austin Airbnb host legal protection guide covers every layer together. And if you're still working through the license application itself, the Austin STR license application walkthrough has the step-by-step detail.

Comparing Your Options: A Practical Framework

When evaluating Airbnb insurance options as an Austin host, work through these questions in order:

Does your current homeowners policy explicitly cover STR activity? If yes, confirm the liability limits, the conditions for claims during guest occupancy, and whether loss of income is included. If no — or if you're not certain — you need a different policy before your next booking.

Is AirCover your only coverage? If so, you're exposed during owner-use periods, between bookings, for losses not reported within AirCover's documentation window, and for any incident outside AirCover's defined scope.

Does your property's value, location, or revenue level warrant STR-specific coverage? For most Austin hosts, a purpose-built STR policy from a provider like Proper Insurance is the cleanest, most comprehensive solution. For investment owners managing multiple Austin properties, a landlord policy with STR riders or commercial coverage may better match your operating structure.

Have you disclosed your STR use to your current insurer? Non-disclosure is a policy voiding event in many cases. If you haven't told your insurer that you're renting on Airbnb, you likely don't have the coverage you think you do.

Getting the Right Coverage in Place

The Austin STR insurance market has matured significantly, and there are purpose-built solutions for essentially every operating model — from occasional homeowners renting a spare room to full-time investors running multiple luxury properties. The key is matching your coverage to your actual risk profile rather than defaulting to whatever policy came with the property.

Work with an insurance broker who has experience specifically with short-term rental operators in Texas. They'll know which carriers write STR coverage in the Austin market, what the policy language means in practice, and how to structure coverage that satisfies the city's license requirement while genuinely protecting your asset and income.

Sora Stays manages full-service Airbnb properties across Austin — including neighborhoods like Tarrytown, Zilker, East Austin, Westlake Hills, and Lake Travis — and helps owners navigate insurance requirements as part of the onboarding process. From understanding the Austin STR market to building a protected, profitable operation, the right management partnership makes every layer of compliance easier to get right.

Contact Sora Stays to talk through your Austin property and find out what a professionally managed, fully protected STR looks like in practice.

Bottom TLDR:

Airbnb insurance options for Austin hosts range from AirCover — which excludes non-booking periods, has strict documentation requirements, and shouldn't be treated as standalone coverage — to purpose-built STR policies, landlord policies with STR riders, and commercial property insurance for high-value assets. Austin's STR license requires proof of liability coverage that explicitly addresses short-term rental activity, making the right policy a legal prerequisite before you can list. Engage an STR-experienced insurance broker, confirm what your current policy actually covers, and get the right coverage in place before your next guest checks in.

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Sora Stays is a full-service Airbnb property management company serving Austin, Texas and surrounding areas including East Austin, Zilker, Tarrytown, Westlake Hills, Lake Travis, and the Texas Hill Country. Reach us at info@sorastays.com or call (281) 800-8293.

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