My stomach dropped when the police officer told me, “It’s a civil matter, sir; they have established residency.” The guest who booked 31 days to “relocate for work” stopped paying, changed the locks, and my standard landlord policy adjuster just laughed when I asked for legal defense funds. I am currently staring at a $12,000 quote from an eviction attorney while my mortgage payment is due in three days.
Key Takeaways
- The “30-Day” Rule: In many states (like California and New York), staying 30 days automatically grants tenant rights, making “trespassing” legally impossible.
- Standard Exclusion: Most homeowners and landlord policies exclude “Wrongful Eviction” costs and disputes arising from a “lease” (even a digital one).
- AirCover’s Limit: AirCover offers “Income Loss” protection, but they rarely cover the upfront legal fees required to physically remove a squatter.
- Loss of Rents: You don’t just lose the money the squatter owes; you lose the future bookings you have to cancel (and pay penalties on).
The “Why” (The Trap)
The trap here is the “Voluntary Parting” and “Lease Dispute” Exclusions.
Insurance covers accidents (fire, wind, theft). It does not cover bad business deals. When you hand someone the keys (or a smart lock code), you have “voluntarily parted” with the property. If they refuse to leave, standard carriers view this as a contract dispute, not a property damage claim.
In 2026, with housing shortages, “professional squatting” is an industry. If your policy has a “Tenant Dispute Exclusion,” you are on your own for the legal battle.
The Investigation: I Called Them
I pretended to be a host with a squatter in a basement unit to see who would actually help.
- Proper Insurance: I spoke to a senior underwriter here. They were the only ones who explicitly stated they cover “Wrongful Eviction” legal defense and “Loss of Business Income” during the eviction process. They treat it like a business interruption claim.
- Pros: They actually pay for the lawyer.
- Cons: Premiums are 30% higher than a landlord policy.
- State Farm (Landlord Policy): The agent was sympathetic but firm. “We cover the structure if they burn it down,” she said, “but we don’t pay to get them out.” They view eviction as a landlord’s operating expense.
- Pros: Cheap premiums.
- Cons: Zero help with legal fees.
- Airbnb AirCover: I dug into the 2025/2026 terms. While they promise “Income Loss,” the fine print requires the guest to have “overstayed” their booking. However, once local law declares them a tenant, Airbnb often washes its hands of the situation, claiming it is now a jurisdiction issue, not a platform issue.
- Pros: Might pay for the nights booked but unpaid.
- Cons: Won’t hire a lawyer for you.
Comparison Table: Squatter Coverage
| Feature | Proper Insurance | Standard Landlord (e.g., State Farm) | Airbnb AirCover |
| Legal Defense (Eviction) | YES ($15k limit typically) | NO | NO |
| Loss of Income | YES (Actual Loss Sustained) | NO (Only if physical damage) | Limited (Booking value only) |
| Squatter Damage | YES (Vandalism) | Varies (May exclude “tenant” damage) | YES (Host Damage Protection) |
| Cost | High ( 2k−2k− 4k/yr) | Low ( 800−800− 1.2k/yr) | Free (Included) |
[IMAGE: Photo of a ‘Notice to Quit’ legal document taped to a front door with a blurred smart lock in the background]
Step-by-Step Action Plan
- Check Your Local Laws: Before booking a stay longer than 28 days, Google “[Your City] tenant rights 30 days.” If rights kick in at 30 days, cap bookings at 28.
- Review Your “Loss of Rents” Clause: Open your policy. If it says “caused by a covered peril” (like fire), it won’t cover squatters. You need “Eviction Expense” coverage.
- Sign a Lease: For any booking over 28 days, do not rely on the app. Have the guest sign a physical short-term lease that explicitly waives tenancy rights where legal.
- Install Cameras (Legally): Ensure you have exterior cameras to prove who is entering/exiting. This evidence is vital if you have to prove “abandonment” later.
FAQ
Does AirCover pay for the eviction lawyer?
No. They may reimburse you for lost income after you get the property back, but they generally do not front the cash for the legal battle to remove the guest.
Can I just change the locks?
DO NOT DO THIS. In 2026, “Self-Help Eviction” is illegal in almost every state. If you change the locks or cut the power, the squatter can sue you for damages, and your insurance will deny the claim because your act was “intentional and illegal.”
Does “Vandalism” coverage apply to squatters?
Often, no. Standard policies define vandalism as “malicious mischief.” If a squatter paints the walls black, insurers argue it was a “tenant alteration,” not vandalism.