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Who will cover damages incurred on an Airbnb property?

Two of the hottest new companies are Airbnb and Uber. Both are industry leaders in a concept known as "the sharing economy."

The two companies help consumers contract short term rentals in private residences and get rides, respectively. But when it comes to the risks that could adversely affect the users, the companies may be reluctant to share the blame.

Uber has a history of requesting that drivers allow damage and injury claims from their riders to be covered by their own insurance companies. However, most private auto insurance companies exclude coverage for commercial activities.

Airbnb offers free million-dollar liability coverage to hosts of the tens of thousands of listings in the United States. But this is "secondary" coverage, meaning the company also wants hosts to cover damage claims of injured guests (and their survivors when a death occurs) with their own insurance policies initially.

So what exactly could happen in these types of liability cases? Because the majority of insurance policies don't cover commercial activities, coverage is likely to be disputed or denied outright.

Insured individuals have an "obligation to be forthcoming about all facts relating to [the] insured property," a spokeswoman for Allstate said. Failing to do so "could impact coverage and jeopardize the continuation of insurance."

In other words, drivers for, and those who rent out their beach houses to Florida tourists, would likely have their claims denied and policies canceled.

Some homeowner insurance companies do recognize the difference between someone who is renting a property as a business and someone who does the occasional rental during the height of the tourist season to earn a few bucks. Others provide coverage only for those who earn less than $15,000 annually in rental income.

So what are the rights of consumers who are injured under these murky circumstances? There are no clear-cut answers, and each claim is likely to be scrutinized and handled on a case-by-case basis. To pursue civil justice, it may be necessary to file litigation in the Florida courts.

Source: The New York Times, "A Liability risk for Airbnb hosts," Ron Lieber, accessed Nov. 13, 2015

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