Trial Magazine

A family plans a beach vacation, renting a house through Airbnb. During the vacation, their son falls down the stairs in the rental house where the rug has pulled loose and breaks his leg. However, the property owner’s insurer denies the claim, alleging that it was unaware the property was being used as an Airbnb rental. What do you do?

Described on its website as an “online marketplace,” Airbnb allows registered users or “members” and third-party “hosts” to publish “host services” on its platform. Hosts can communicate and transact directly with “members that are seeking to book such host services,” who are referred to as “guests.” Host services include “the offering of vacation or other properties for use.”¹

Airbnb is the largest but certainly not the only property sharing platform that exists.² As with many areas of the “sharing economy,” property sharing platforms have grown in popularity at a rapid pace, and the law is struggling to keep up.

Claims Against the Property Owner

When guests of Airbnb rental properties are injured during their stay, several possible causes of action are available to bring against the property’s owner. 

Negligence. Tort liability for injuries due to negligence does not change just because injuries occur to guests at an Airbnb property. In most jurisdictions, the negligence standard for premises liability claims requires property owners to act in a reasonable manner with regard to maintenance and safety.

For example, in Rowland v. Christian, the California Supreme Court set forth factors to consider in determining a property owner’s duty of care:

• the location of the property
• the likelihood that someone would come onto the property in the same or similar manner as the person injured
• the seriousness of the potential harm that could be caused by the condition of the property
• whether the landowner or renter knew or should have known about the dangerous condition
• the difficulty in protecting against the risk of harm
• the extent of control that the property owner had over the condition that caused injury. ³

Under these criteria, property owners using Airbnb owe a significant duty of care to guests: They know that guests will use their property for living ­quarters and should plan accordingly. The owner should warn guests about all risks that are known or should be known. Any latent defects that could pose a safety risk should be fully disclosed. This does not require property owners to guard against every possible risk, but it requires that they repair, protect against, or give adequate warning of conditions they should know about through the exercise of reasonable care.⁴

Some jurisdictions still follow the “status of entrant” standard for premises liability claims, and they distinguish among property licensees, invitees, and trespassers.⁵ In these jurisdictions, Airbnb guests most likely would be deemed “business invitees,” because they are on the property with the owner’s express permission and the owner is receiving a direct benefit for the stay (compensation). Business invitees are owed the highest duty of care. 

Property owners have various affirmative defenses to negligence claims in both status of entrant and Rowland jurisdictions. For example, most jurisdictions do not hold a property owner liable for an “open and obvious condition.”⁶ A guest’s comparative fault in not observing dangerous conditions also may be considered.⁷

Intentional or negligent misrepresentation. An Airbnb guest may be able to bring a fraud claim against the property owner if the owner intentionally misrepresents a property. In most jurisdictions, intentional misrepresentation requires a showing of a representation of fact either known to be false or made with a reckless disregard for the truth upon which the plaintiffs reasonably relied to their detriment.⁸ In addition to compensatory damages, punitive damages may be available if you can show that the owner knowingly or recklessly misrepresented the condition of the property and the plaintiff relied on this and sustained bodily injury or other loss as a result.⁹

Property owners also can be found liable for negligent misrepresentation in most jurisdictions if they “may have honestly believed that the representation was true . . . but had no reasonable grounds for believing the representation was true.”¹⁰ An Airbnb guest may be able to claim compensatory damages against a property owner who has made representations that the owner should have known to be untrue.

Intentional torts. A guest may have a claim if an Airbnb property owner engaged in some type of intentional conduct. For example, in a recent case in San Francisco, an Airbnb guest alleged that she was sexually assaulted by her Airbnb host.¹¹ In another recent case, an Airbnb property owner smashed his property’s bedroom window while his guests were sleeping, injuring them with shards of glass.¹² In yet another case in Costa Rica, an Airbnb guest was stabbed near her rental property, and the security guard for the property complex has been detained as the prime suspect.¹³

Airbnb guests also may bring claims for intentional torts, such as criminal assaults or batteries, by third parties on or near an Airbnb property. In most jurisdictions, a property owner’s liability is generally limited when a third party’s intentional or criminal acts are not ­foreseeable.¹⁴

However, the property owner or proprietor of a business may be found liable if the conduct can be reasonably anticipated.¹⁵ For example, if the property is in an area where frequent criminal activity has occurred before, the Airbnb host or Airbnb itself may be obligated to warn guests to ensure precautions are taken, such as providing an alarm system and passcode and ensuring door and window locks are functioning properly.

Consumer protection. In many jurisdictions, consumer protection statutes may provide for a private right of action against the property owner and Airbnb. For example, California prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”¹⁶ New York City has been engaged in litigation with Airbnb to get it to submit information about hosts and properties (to avoid consumer deception), but a federal judge blocked the law.¹⁷

Claims Against Airbnb

When guests assert claims against Airbnb, the analysis changes quite a bit.

Negligence. Airbnb describes itself as a “platform” that property owners can use to advertise a property for rent. Airbnb has already asserted this as a defense in negligence claims brought against it.¹⁸ For example, in a UK balcony collapse case, Airbnb claimed it was not liable for the guests’ injuries because it had not provided the accommodation, just the booking platform.¹⁹ Airbnb now makes this argument less frequently because it has realized that making hosts solely liable deters people from listing their properties on the Airbnb platform. However, if you encounter this argument, you can meet it with claims of misrepresentation and fraud under U.S. federal and state law.

Airbnb also requires guests to sign liability waivers and includes an arbitration policy in its terms of service for any claims arising in the United States.²⁰ Airbnb’s terms of service require guests to expressly assume the risks of the use of the Airbnb platform, including any “damages for personal or bodily injury or emotional distress.”²¹ The effect of such a liability waiver varies depending on the jurisdiction; however, it could increase the plaintiff’s burden significantly.

For example, in California, such express waivers can require the ­plaintiff to show either gross negligence or intentional harm rather than satisfying a simple negligence standard.²² However, in other jurisdictions, such as Illinois, these waivers are subject to scrutiny and nonenforcement based on public policy considerations.²³ The terms of service also require mandatory arbitration under American Arbitration Association guidelines for “any and all” disputes that may arise between Airbnb and any guest of an Airbnb property.²⁴

Negligent misrepresentation. Bringing negligent misrepresentation claims directly against Airbnb may pose substantive and procedural difficulties. Airbnb’s terms of service state that the platform is provided “‘as is,’ without warranty of any kind, express or implied.”²⁵ The terms also require an acknowledgment that guests “are not relying upon any statement of law or fact made by Airbnb relating to a Listing.” This disclaimer may affect your ability to pursue claims for misrepresentation based on the law of your jurisdiction.

Jurisdictions such as Delaware favor enforcement of disclaimer clauses.²⁶ Likewise, in Florida such clauses have been upheld to completely preclude claims for fraud.²⁷ However, enforcement of these disclaimer clauses tends to occur most often in complex business transactions, so the defendants may argue that these decisions are not applicable in the consumer context. As a practical matter, unless there are strong facts to support claims of negligent misrepresentation, naming Airbnb as a defendant may simply force you into defending against a demand for arbitration or subject your claims to further affirmative defenses.

Intentional torts. The question also arises as to what liability, if any, Airbnb has for the intentional torts of a property owner. In the San Francisco case described earlier, the plaintiff claimed that Airbnb represented in its disclosures that the host had been subject to a background check, but the host allegedly had been arrested and charged with domestic battery but was not convicted. Airbnb also had designated the host to be a “superhost.” And because ­superhosts must meet certain reservation, review, and response thresholds,²⁸ one could argue that Airbnb made additional representations as to the host’s fitness above and beyond regular hosts.

Insurance Coverage Issues

Most hosts have basic homeowners insurance coverage for personal injury and property damage claims. However, these policies generally exclude coverage when property is being used for “business purposes.” Insurers are now developing more types of coverage to accommodate the growing number of property owners who post their homes and businesses on property sharing platforms. While some insurers may offer coverage for first-time property share claims even when a supplemental policy covering property shares was not purchased, other carriers still outright deny coverage.

As a result, Airbnb has begun offering “host protection insurance” (HPI) to cover property share-related personal injury claims.²⁹ However, Airbnb’s HPI only covers a scheduled stay, so if a guest arrives earlier than scheduled or stays later, there may not be coverage. HPI coverage also is limited to $1 million per occurrence, with a total limit available per location of $1 million during an HPI Program policy term.³⁰ In addition, HPI specifically excludes injuries from asbestos, lead, Chinese drywall, fungi, or bacteria; products liability claims; and claims related to communicable diseases or acts of terrorism.³¹

For all insurance coverage purposes, it is best to include and emphasize the negligence of the property owner, as intentional acts usually will be denied. For example, if a person is injured or killed in an attack while on the property, you should emphasize negligence factors such as failure to install proper locks on doors or windows or failure to otherwise take reasonable precautions to prevent such an attack.

Airbnb’s HPI is secondary coverage, so first you must submit a claim to the property owner’s carrier through the homeowners policy. If the claim is denied, then you can try submitting the claim through the owner’s HPI policy. However, owners may not inform their insurance company that they are using their property for commercial gain, which could lead to the primary insurer denying coverage when a claim is made and learns of the property share use. Questions remain as to whether Airbnb, through its HPI, will still pick up coverage in this instance.

Despite potential coverage issues, the chances that either the homeowners insurance or Airbnb’s HPI will pick up coverage and pay the claim are still somewhat probable. Most homeowners insurance carriers are fairly liberal in allowing coverage lest they subject themselves to a potential bad faith claim and their insureds to personal liability.

Bringing a claim against a property owner or directly against Airbnb raises many substantive and procedural issues. But you can successfully navigate these issues to hold property owners and platforms liable for their negligent and intentional acts against your client.

Steven Sweat is an attorney in Los Angeles.

Notes

1. Airbnb, Inc., Terms of Service, https://www.airbnb.com/terms?source=community_commitment.
2. Several other property sharing platforms exist, including VRBO (www.vrbo.com) and Homeaway (www.homeaway.com).
3. Rowland v. Christian, 443 P.2d 561 (Cal. 1968); see also Steven M. Sweat, California Personal Injury Laws: Famous Cases, Cal. Accident Att’ys Blog (Feb. 15, 2014), https://www.californiaaccidentattorneysblog.com/california-personal-injury-laws-famous-cases-rowland-v-christian/. Many jurisdictions have adopted this standard in whole or in part: see, e.g., O’Leary v. Coenen, 251 N.W.2d 746 (N.D. 1977); see also Poulin v. Colby Coll., 402 A.2d 846, 848–49 (Me. 1979); Waters ex rel. Murphy v. U.S. Fidelity & Guaranty Co., 369 N.W.2d 755, 757–58 (Wis. Ct. App. 1985) (citing Antoniewicz v. Reszcynski, 236 N.W.2d 1 (Wis. 1975)); Hudson v. Gaitan, 675 S.W.2d 699, 703–704 (Tenn. 1984); Clarke v. Beckwith, 858 P.2d 293 (Wyo. 1993).
4. Judicial Council of Cal. Civ. Jury Instr., Cal. Civ. Jury Instr. §1003 (2018), http://www.courts.ca.gov/partners/documents/aci_2019_edition.pdf.
5. E.g., Little ex rel. Little v. Bell, 719 So. 2d 757, 760 (Miss. 1998).
6. See, e.g., King v. Cornell Univ., 990 N.Y.S.2d 329, 331–32 (N.Y. App. Div. 2014); Gen. Motors Corp. v. Hill, 752 So. 2d 1186 (Ala. 1999).
7. Felmlee v. Falcon Cable TV, 43 Cal. Rptr. 2d 158 (Cal. Ct. App. 1995).
8. Stuart M. Speiser, Charles F. Krause, & Alfred W. Gans, 10 American Law of Torts §32.40 (March 2019 update).
9. E.g., In a landlord/tenant context, which one could analogize to the Airbnb scenario, see Stoiber v. Honeycheck, 162 Cal. Rptr. 194, 202 (Cal. Ct. App. 1980). 
10. Cal. Civ. Jury Instr. §1903 (2018); see also Cal. Civ. Code §1710(2) (West 2019).
11. Shivani Vora, Airbnb Sued by Guest Who Says a Host Sexually Assaulted Her, N.Y. Times (Aug. 2, 2017), https://www.nytimes.com/2017/08/02/travel/airbnb-lawsuit-host-sexual-assault.html. 
12. Sean P. Murphy, An Airbnb Guesthouse of Horrors, Boston Globe (Oct. 8, 2018), https://www.bostonglobe.com/business/2018/10/08/airbnb-guesthouse-horrors/NJhq55qg0a2h6nO0aOsEJK/story.html.
13. Monique O. Madan, Family of Florida Woman Killed in Costa Rica Sues Airbnb, Miami Herald (Dec. 22, 2018), https://www.miamiherald.com/news/local/article223476120.html.
14. Cal. Civ. Jury Instr. §432 (2018).
15. Restatement (Second) of Torts, §355 (1965).
16. Cal. Bus. & Prof. Code §17200 (West 2019); see also N.J. Stat. Ann. §56:8-2 (West 2019); Wash. Rev. Code §19.86.020 (West 2019).
17. Gaby Del Valle, A Federal Judge Blocked New York’s Latest Attempt to Crack Down on Airbnb, Vox (Jan. 10, 2019), http://tinyurl.com/yxsumcz3.
18. Robert Booth & Dan Newling, Airbnb Denies Liability After Guests Plunge Two Storeys From Balcony, The Guardian (Nov. 29, 2016), www.theguardian.com/technology/2016/nov/29/airbnb-denies-liability-after-guests-plunge-two-storeys-from-balcony.
19. Id. See also Carroll v. Am. Empire Surplus Lines Ins. Co., 289 F. Supp. 3d 767 (E.D. La. Dec. 21, 2017).
20. Airbnb, Inc., supra note 1.
21. Id.
22. Eriksson v. Nunnink, 120 Cal. Rptr. 3d 90, 114–15 (Cal. Ct. App. 2011).
23. Garrison v. Combined Fitness Centre, Ltd., 201 Ill. App.3d 581 (Ill. App. Ct. 1990).
24. Airbnb, Inc., supra note 1.
25. Id.
26. See RAA Mgmt., LLC v. Savage Sports Holdings, Inc., 45 A.3d 107, 117–18 (Del. 2012); Abry Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032, 1058 (Del. Ch. 2006) (noting that failing to enforce explicit anti-reliance clauses would “excuse a lie made by one contracting party in writing”).
27. See Billington v. Ginn-LA Pine Island, Ltd., LLLP, 192 So. 3d 77 (Fla. Dist. Ct. App. 2016).
28. Vora, supra note 11; Airbnb, How Do I Become a Superhost?, https://www.airbnb.com/help/article/829/how-do-i-become-a-superhost. 
29. Airbnb, Inc., What Is Host Protection Insurance?, https://www.airbnb.com/help/article/937/what-is-host-protection-insurance; Airbnb, Inc., Host Protection Insurance, https://www.airbnb.com/host-protection-insurance.
30. Airbnb, Inc., Host Protection Insurance Summary (Feb. 27, 2018) https://www.airbnb.com/users/hpi_program_summary_pdf.
31. Id.