The short answer
Protection for a short-term rental comes in three layers: insurance that includes hosting, a damage deposit or damage waiver on every direct booking, and the platforms’ own programs like Airbnb’s AirCover. The first two belong to you and work on every booking, from every channel. The third exists only on the platform that runs it, pays at that platform’s discretion, and disappears entirely the moment a guest books direct. Build the first two properly and AirCover becomes what it should have been all along: a bonus, not a plan.
What AirCover actually is, and isn’t
AirCover for Hosts bundles guest identity verification, up to $3 million USD in guest damage protection, $1 million USD in host liability insurance, and a 24-hour safety line. It costs nothing, and for Airbnb stays it has real value. It also has edges worth knowing exactly where they are:
- It covers Airbnb stays and guest caused damage only. A guest who books through your own website, Vrbo or Booking.com is outside AirCover completely, no matter what happens. If a water pipe bursts during a stay, it’s likely not damage caused by the guest, and will not be covered by Airbnb. If your home insurance doesn’t include short stays, you could find yourself underinsured.
- The damage protection is not insurance. Airbnb’s own terms are explicit that host damage protection is not an insurance policy. It is a reimbursement program that Airbnb runs and pays at its discretion: you are not a policyholder, there is no independent adjuster, and the company deciding your claim is the same company writing the cheque.
- Conditions apply. Normal wear and tear is excluded, evidence standards are strict, claim windows are tight, and the limits are in US dollars. Airbnb’s own help pages state that AirCover "is not a substitute for personal insurance." Their words.
- The liability portion is real insurance, underwritten by third-party insurers. Useful, and still Airbnb-stays-only.
None of this makes AirCover useless. It makes it a platform perk. The moment you take direct bookings, which is the whole point of this series, you need protection that belongs to you.
Standard home insurance is not enough
A standard Canadian home or condo policy is written for you living in your home, not for a rotating cast of paying guests. Most insurers treat short-term renting as a commercial activity, and hosting your insurer does not know about can give them grounds to deny a claim, or in the worst case void the policy when you need it for something unrelated, like a flood or fire. That risk exists whether the guest came from Airbnb, Vrbo or your own website.
The fix is a conversation, not a secret. Tell your insurer you host, and get the coverage that matches how you actually use the property.
What proper STR insurance looks like
Three routes, in rough order of how often they fit small Canadian hosts:
- A short-term rental endorsement on your existing home policy. Some Canadian insurers (Square One is one example) will add STR coverage to a homeowner policy for a few hundred dollars a year. Often the simplest route when you host part of your own home or rent occasionally.
- A dedicated STR policy. Specialty providers writing short-term rental coverage in Canada bundle property damage, liability — $2 million is the common floor — and loss of rental income into one policy. Usually the right shape for a full-time rental like a resort property.
- A broker with specialty markets. For high-value properties, multiple listings, or anything unusual, a licensed insurance broker can reach markets you cannot, and will put the answers in writing.
Whichever route you take, confirm one thing in writing: that you are covered on every booking regardless of where it came from. Coverage that quietly assumes all your guests arrive through one platform defeats the purpose.
And to be plain about our own lane: StayCanadian is a listing platform, not an insurance advisor, and nothing here is insurance advice. A licensed broker who knows short-term rentals in your province is worth the phone call.
Damage deposits on direct bookings: three ways to do it
On the OTAs, deposits are largely out of your hands. On your own website you decide, and your booking engine can automate any of the three standard approaches:
- A pre-authorization hold. Your booking engine (most run on Stripe or similar) freezes an amount on the guest’s card around check-in and releases it after checkout. No money actually moves and no processing fee applies unless you capture it. One catch: standard card holds expire after about seven days, so for longer stays your PMS needs to re-authorize, or you time the hold to start at check-in.
- A refundable captured deposit. You charge the deposit for real and refund it after checkout. Guests see money leave their account, which some dislike, and processing fees can apply — but it is simple, and it works for stays of any length.
- A damage waiver. A small non-refundable fee (typically $25 to $95) that covers accidental damage up to a capped amount, usually $1,500 to $3,000. Friendlier at checkout than a large hold; the trade is that you lose the deterrent effect and depend on the waiver provider’s claims process.
On amounts: most small hosts hold somewhere between $250 and $1,000, or roughly one night’s rate. Larger managers increasingly run a hybrid — a waiver to absorb the small stuff, a real hold on higher-risk bookings.
Whatever you choose, write it down. Your deposit belongs in your plain-language policies, findable before checkout, not discovered at the door. A surprise deposit is a review problem you created yourself.
Common mistakes
- Assuming the home policy has it covered. Undisclosed hosting is the quiet way to pay premiums for years and find out you were never covered.
- Treating AirCover as the insurance plan while building direct bookings. Every direct stay you win is a stay AirCover ignores; your own coverage has to arrive before the growth does.
- Taking deposits by e-transfer. It converts terribly, protects no one, and turns every refund into a manual chore.
- Setting the deposit so high it kills conversion. A $500 hold reassures a guest that you run a serious operation; a $3,000 hold sends them back to Airbnb.
- Forgetting hold expiry on long stays. A hold placed at booking for a stay three weeks out has already expired by check-in. Automate the process in your PMS.
Where StayCanadian fits
StayCanadian sends travellers to your own website to book; we never touch the booking, the payment or the deposit. That means your policies and your coverage are the ones that count on every stay we send you — one more reason to have both sorted before you switch on direct bookings.