From a recent post, Oakland incident highlights risks for absentee landlords, by Edward Hasbrouck:
Second, Airbnb’s guarantee does not cover any personal liability to third parties — only damage to the rental property and its contents.
If your Airbnb tenants’ meth lab contaminates or burns down your neighbors’ property (the other condo units in the same building, for example, or the house next door) along with your own, Airbnb will reimburse only the damage to your own home. You’re still liable in full for the damage to your neighbors’ homes. Ditto if damage to the plumbing, or firefighting in your unit, causes flooding and water and/or smoke damage to other units in the building or other nearby properties.
I’ve been a contented Airbnb “guest” several times but, like Edward, I’ve never considered becoming a “host,” for many of the same reasons he enumerates.