Short-term rental homes have been filling up quickly in the Phoenix, Arizona, area as fans prepare to celebrate Super Bowl LVII on Sunday, Feb. 12. Football lovers looking to stay closest to the action at State Farm Stadium could expect to find average Airbnb rates around $1,000 per night, Cronkite News reported, with at least one listing asking as much as $9,950 per night as the demand prompts more owners to list their luxury homes for short-term rental.
“Many places here have been booked up for months and months,” she said. “Short-term rental can be a great income generator, so I understand the temptation from a homeowner perspective, but it is a huge liability to them. The risk may not be worth the reward.”
Short-term rental can be a great income generator, so I understand the temptation from a homeowner perspective, but it is a huge liability to them. The risk may not be worth the reward.
To help prevent Super Bowl parties, VRBO is using “unauthorized event prevention technology” to flag potential party bookings based on the number of guests and other factors and giving hosts the option to cancel these bookings penalty-free. Airbnb, meanwhile, has reportedly been in touch with law enforcement agencies about the risk and held a forum for hosts.
“I think it is definitely important to put these regulations in place,” said Catherine Mekemson, Senior Underwriter, Personal Insurance, Burns & Wilcox, San Diego, California. “Whether it is the Super Bowl, St. Patrick’s Day or the Fourth of July weekend, it is a good idea to flag those rentals and take extra precautions. Hosts should also be aware of the risks with parties and make sure they have the right insurance in place.”
Alcohol, heightened emotions may increase risk of problems
First introduced in the U.S. and Canada in mid-2020 and officially codified in the summer of 2022, Airbnb’s “party ban” prohibits disruptive events, including open-invite parties, and lays out consequences such as account suspension for those who violate the terms, according to the rental platform’s website. Minimum stay requirements and other restrictions may be added during certain holidays, like New Year’s Eve, USA Today reported. VRBO also prohibits parties, with similar consequences for those who break the rules, according to Fox News. After Airbnb’s initial party ban in 2020, the platform saw a 44% year-over-year reduction in parties in the U.S. and a 47% reduction in Canada, CTV News reported last year.
Emotions can run high during high-stakes sports games, which could make Super Bowl parties particularly risky — especially since they often include alcohol, Alphabet said. A surprising number of viral videos show fans punching, smashing or even shooting their TVs over game disappointments, The Atlantic recently reported.
“The spirit of the event can definitely make individuals either more excitable – in a good way or upset. In either case, they could cause damage,” Alphabet said, pointing to the risk of physical altercations and accidents. “When emotions are elevated, it could cause careless things to happen.”
The homeowner themself could be sued if somebody gets injured while they are at a party at the home.
Property owners who rent out a primary or secondary residence on platforms like Airbnb and VRBO typically need to carry Homeowners Insurance with an endorsement in place for short-term rental use. If someone gets hurt during their stay and files a lawsuit against the owner, the policy could provide coverage for medical expenses, legal defense, and more. “The homeowner could be sued if somebody gets injured while they are at a party at the home,” Alphabet said.
Homeowners Insurance with a short-term rental endorsement could also cover guest-related property damage to the home or neighboring properties. Last spring in Pigeon Forge, Tennessee, an Airbnb host found more than $5,000 in damages to his two-person cabin after renters threw a party with over 60 guests, WJHL reported.
Incidents can happen with any event but there is often alcohol at Super Bowl parties, and that can certainly make it riskier, especially if guests are excited about the game and getting caught up in emotions about the result of the game.
“If something is damaged, they will be held accountable for it,” Mekemson said. “Incidents can happen with any event but there is often alcohol at Super Bowl parties, and that can certainly make it riskier, especially if guests are excited about the game and getting caught up in emotions about the result of the game.”
Without an endorsement for short-term rental use, homeowners who rent out their property could face an uninsured loss if an incident occurred. “A lot of homeowners just assume damage incurred during a short-term rental is automatically covered,” Mekemson said. “In the event of a claim, it may not be covered.”
Higher liability limits could be needed
In April of 2022, an Airbnb home in Pittsburgh, Pennsylvania, was the site of a party where a shooting took place, claiming the lives of two teenagers and injuring eight other individuals. One woman, who broke her leg after jumping from a second-floor window to escape the gunfire, filed a lawsuit against Airbnb and the property owners in November, alleging the party was advertised on social media and should not have been allowed to take place, CBS Pittsburgh reported. At least one other lawsuit has been filed over the incident.
For many owners of short-term rental homes, Excess Liability Insurance may be worth considering, Alphabet said. This type of policy provides additional liability limits above and beyond the Homeowners Insurance policy. “As the owner, you want to make sure that you have high enough liability limits,” she said.
Just to make sure you are covered, I would try to get as much liability coverage as you can.
Even a slip-and-fall accident could lead to a catastrophic claim, Mekemson noted. “You just never know if there is going to be some case where somebody trips and falls, goes into a coma, and it maxes out $1 million on one policy,” she said. “Just to make sure you are covered, I would try to get as much liability coverage as you can.”
The potential for serious losses has led to fewer insurance carriers offering a short-term rental use endorsement on their Homeowners Insurance policies, Alphabet said. “It is getting more difficult to get that endorsement,” she said, adding that these policies should be reviewed carefully for potential requirements and restrictions. “You would have to review the contract and see if you are covered and to what extent. Are there rules in place regarding alcohol or number of guests, for example?”
To find insurance coverage, homeowners “will have to look to the excess and surplus market and wholesalers like Burns & Wilcox more and more,” Alphabet said. “They can also expect prices to go up because the risks are definitely going up,” she said.
Standalone insurance policies for short-term rental homes are also available in some cases, Mekemson said, and these will generally require a questionnaire that goes over various details of how the rental home will be used. “They will ask how renters will be vetted, the rental rate, minimum stay, age limits and more,” she said. “We like to go through those things to put as many safeguards in as possible to reduce the risk.”
Screening renters, taking precautions for private parties
In some areas, concerns over short-term rental homes becoming “party houses” have prompted local officials to get involved. In Arizona, several cities have acted on legislation that went into effect in 2022 allowing restrictions on short-term rental homes; cities can require owners to be licensed and carry certain liability limits, for example, Axios reported late last year. In Hoover, Alabama, city officials are currently weighing an ordinance that would block short-term home rentals of less than 30 days in single-family neighborhoods, the Hoover Sun reported Feb. 6.
“I know there are many places here in Arizona where neighbors themselves have been lobbying together to get party houses out of their neighborhoods,” Alphabet said.
In San Diego, California, Mekemson said new rules go into effect in May requiring an application and licensing process for short-term rentals. “That could cut down a lot on some of the risks,” she said. “It will be interesting to see if that helps.”
Even with anti-party regulations in place, owners of short-term rental homes can take steps to reduce the risk of an incident, Mekemson and Alphabet agreed. This can include screening renters by age, only working with renters with positive reviews on platforms like Airbnb and VRBO, having agreements in writing and using a property manager. Security cameras and a central station fire and burglary alarm may also be recommended.
“You can vet out the individual based on their past reviews or previous stays,” Mekemson said. “I think the review system is incredibly important, and that individual can review you as well. That makes the process a little more trustworthy.”
In addition, house rules should be clear and readily available for guests. “It is very important to lay out the rules and what you are expecting of the guests in your place — and reiterate that,” she said.
Of course, even homeowners hosting their own Super Bowl parties should take precautions to reduce the risk of guest injuries and property damage. This can include removing snow and ice from walkways and being careful about pets that may be aggressive around guests. “It is important to really know how social and comfortable your pet can be in that environment,” Mekemson said. “If you have any concerns at all, it may be better for them to just not be there.”
As with any party, “be careful about alcohol, the number of guests you have, and always know who you are inviting,” Alphabet added. “Keep it peaceful while having fun.”