How To:

Mitigate the Risk Of Your Airbnb

If you’re wondering how to mitigate risk of your Airbnb then we have some suggestions for you!

When setting up your vacation rental you will want to consider your local regulations, insurance, security and safety. Consider safety and security as one of your top concerns when staging and designing your property.

Many hosts only consider how to mitigate their risk after something happens. Being proactive on risk mitigation is going to save you a lot of pain and heart-ache.

Legal and Regulations for Airbnb Properties

First and foremost be aware of the legality of renting out your property as a vacation rental. This requires some research and investigation skills since the answer is rarely obvious. Regulation should be checked at all levels of government including your strata or HOA, if you have one.


Federal government’s regulation of short term rentals usually involves the taxation and income reporting of your property. Consult a tax professional to learn about your obligations. You will be obligated to declare your rental income and pay applicable income taxes. Fortunately you should be able to claim your expenses, so make sure to keep the receipts related to operating and maintaining your property.

Provincial or State

Provincial and state governments involvement in the regulation of rentals is often in regards to the collection of taxes directly from rental sites such as Airbnb. These taxes are automatically remitted to the government so there is little to do about this but it is important to know. The best way to learn about the tax collection is to Google “{Your Province or State} Airbnb Taxes” as an example take a look at the regulations in Canada.


Municipalities are the main regulator of Airbnb since they control the zoning of the city and deal with business licenses. Frequently the zoning of Airbnb is restricted to commercial zonings, this can often cause some confusion on the legality.

For example, when we were looking for a short term rental in Harrison Hot Springs, Canada, we read articles about the legality in the city from the local newspaper. In the article it reads “Village says ‘no’ to short term vacation rentals” this is only partly true. In reality the city restrictions are limited to residential zoning while the property we were interested in was commercially zoned. After reviewing government documents it became clear that the article was misleading, which incidentally kept lots of potential competitors out of the market. Great news for us!

In addition to zoning, check if the municipal government requires a business license to operate. Often these licenses are around $150 and easy to get if you are operating legally.

Strata or HOA

The final sudo-government is your strata or HOA. Often rentals in apartment buildings are restricted outright or only have a designated number of units that can be rented. Check the bylaws of your strata to determine if operating a short term rental is permitted. If not you can be stuck with some hefty fines.

In short, make sure you are always operating legally. There is no better risk mitigation strategy than doing everything above board. The last thing you want is to be shut down and be stuck with major fines.

Insurance & Security Deposits

Second to legally operating make sure to protect yourself by being fully insured and always charging a security deposit.

Host Protection Insurance

Vacation rentals sites such as Airbnb typically offer some sort of protection for hosts. The coverage of Airbnb provides $1 million in coverage of bodily injury and property damage. Review the policies of Airbnb to learn about the coverage.

Although it may seem like this coverage is enough to protect you, it is not. Hosts often have challenges dealing with their claims and the coverage is fairly limited compared to true rental insurance.

Short Term Rental Insurance

We highly recommend further protecting yourself with short term rental insurance. This coverage will cover more types of claims to your property including flooding, fires, etc. We suggest contacting a professional insurance broker to discuss your insurance options. In most cases rental property insurance should be sufficient however it may be that you need to get business insurance.

Security Deposits

Your first line of protection is the security deposit you charge your guests. This claim can be used to cover damages to furniture or to replace missing items, such as a key fob. Collecting a security deposit is much easier than dealing with insurance claims. A $250 security deposit is fairly standard but it depends on the size of your property and value of your contents.

Although it may be tempting to use the security deposit for any damages done you should be sympathetic to guests. Some damages are truly not their fault and are the result of general wear and tear.

Durability & General Maintenance

Expect that over time your furniture, property contents, and property will wear and tear. This is called depreciation and it’s unavoidable. However you can extend the life of your assets by purchasing durable items and keeping things well maintained.

  • Choose items that are simple to clean such as non-fabric furniture
  • Purchase durable items even if they cost more
  • Use high quality hotel grade towels and sheets
  • Pick darker colour fabrics
  • Frequently have inspections of your property
  • Resolve maintenance issues as soon as possible
  • Keep note of the expected life and warranty of your items

Airbnb Security & Prevention

Many hosts are concerned about the security and use of their property. Fortunately there are many tools available to monitor your property. Smart locks and noise monitoring tools are some of the best.

Smart Locks

Smart locks have become extremely sophisticated and a great tool to both simplify your processes and heightened security. The August Lock for example gives notifications on how frequently the door is opened and if it was forgotten to be locked. It also allows for time restricted access enabling strict check-in and checkout processes. No need to worry about a previous guest returning to the property after their stay.

Noise Monitoring

Noise monitoring is a subject of some debate on the privacy of guests but can be a great tool to monitor for parties in your property. Products on the market typically only monitor decibels rather than actual conversations which should put concerns largely at ease. However we suggest letting guests be aware of the presence of the device in your listing description. This will hopefully minimize guest complaints.

Please note: you may be tempted to use cameras to monitor your property, you should absolutely not do this. Indoor cameras violate Airbnb policy and are a major violation of guest privacy. Cameras are something that guests will undoubtedly be angry about.

Airbnb Risk Mitigation Summary

  1. Know the laws; federal, provincial, municipal, and with your strata
  2. Operate legally and with all required licenses
  3. Purchase additional short term rental insurance
  4. Charge a security deposit to cover minor damages
  5. Choose durable and easy to clean furnishings
  6. Perform regular maintenance and repairs
  7. Utilize security systems such as smart locks and noise monitoring