Airbnb Renters are “Insureds” for the Purposes of Potential Subrogated Claims

In Strata Plan VR 2213 v Schappert, 2023 BCSC 2080, the BC Supreme Court was asked to decide a special case which looked at whether a strata corporation’s insurer could subrogate against a third party who had rented a unit in the strata building through Airbnb. The Court held that the insurer was barred from doing so by the common law rule which prohibits insurers from subrogating against their own insureds unless their policy explicitly allows them to do so. It found that the Airbnb renter was an “insured” under the policy in question.

The defendant had spent five nights in one of the plaintiff strata corporation’s units in a Vancouver residential building, having rented it via Airbnb. While he was staying there, the defendant accidentally started a kitchen fire which set off the building’s sprinkler system, causing damage to the strata’s common property.

The strata was insured under a policy which provided first-party property damage coverage. Its insurer paid out to cover the costs arising from the damage caused by the fire, and then commenced this subrogated claim in an effort to recover those costs from the defendant.

One of the positions taken by the defendant was that the claim was barred by the common law rule which provides that an insurer has no subrogation rights against its own insured. The defendant said that he qualified as an “insured” under the strata’s policy due to the definition set out in the Strata Property Act (“SPA”). That definition was specifically incorporated into the strata’s insurance policy’s definition of “insured.”

The Court agreed with the defendant, finding that he was an “insured” under the SPA, and thus under the policy, because as an Airbnb guest, he was a person who normally occupied a strata lot. The Court noted that the unit the defendant had rented was authorized for use as a short-term rental under the strata’s bylaws. The defendant had occupied the unit in a manner which was authorized by the strata for that particular unit, and therefore had been using it in a manner which was normal and common for that unit. According to the Court, this interpretation is consistent with the objectives of the SPA.

This decision indicates that strata corporations’ insurers will be unable to pursue subrogated claims against Airbnb renters who temporarily occupy strata units, at least where the units’ use as short-term rentals is authorized by the strata. Insurers who wish to maintain their right to subrogate against short-term renters should do so by including explicit language in their policies to reflect this intention.