It looks like AirBnB themselves may also be working on providing an insurance policy. I wonder if it'll cost extra?

http://launch.is/blog/airbnb-confirms-insurance-in-case-your...

Good luck being able to cover all a person's personal heirlooms that cost thousands.

As long as the volume of insurance related payouts is small enough and the volume of customers purchasing insurance is large enough, then it's a viable business model. In fact, that's how insurance works (and how it stops working when there are major catastrophes that cause the number of claims to spike dramatically).

Usually property insurance works as a percentage of the insured amount. If I were to rent out my house I'd put my treasured heirlooms into storage/safe deposit box.