Many people are choosing to rent out their homes as vacation properties for short-term stays through platforms like Airbnb or VRBO. In some locations it can be a very lucrative venture, especially during certain times of the year like summer vacation or holiday weekends. Unfortunately, short-term rentals are not without their risks. Broken windows, guest injuries, or property damage could cost you dearly. To protect the investment you’ve made in your property, you need to have the right insurance coverage.
What Insurance Do You Need as a Short-Term Rental Owner?
Imagine: One weekend in your rental home, a guest slips on a wet floor in the kitchen, falls, and suffers a serious back injury. The guest ends up in the hospital with a hefty medical bill and decides to sue you for negligence, claiming that the floor was dangerously slippery and that you failed to provide adequate warning or slip-resistant flooring. Suddenly, that short-term rental doesn’t seem like such a sound financial opportunity anymore.
Homeowners Insurance Isn’t Enough
Short-term rental owners often assume their standard homeowners insurance policy will cover damage to their property, but this is usually not the case. Homeowners insurance is designed specifically for owner-occupied homes and often excludes coverage for commercial activities, including short-term rentals. If your insurance company discovers that you’re renting your home on platforms like Airbnb without the proper coverage, they could deny your claim or even cancel your policy entirely.
Short-Term Rental Insurance
The most comprehensive coverage for rental properties is a specialized short-term rental insurance policy. This insurance is designed specifically for owners who rent their properties for short periods and provides protection for both you and your guests. Key features of short-term rental insurance include:
Property Damage: This covers damage to your property caused by guests, including vandalism, theft, and accidental damage.
Liability Protection: This protects you if a guest gets injured on your property and decides to sue.
Loss of Income: If your property becomes uninhabitable due to damage, this coverage compensates for lost rental income during repairs.
Host Protection Insurance (Airbnb Host Guarantee)
If you’re listing your property through Airbnb, the platform does provide some insurance coverage through their Host Protection Insurance and Host Guarantee programs. However, it’s important to understand that the coverage they offer is limited and may not be sufficient for your needs. The Host Guarantee covers property damage up to $1 million, but it doesn’t cover wear and tear, cash, securities, or pets. The Host Protection Insurance covers liability up to $1 million per occurrence, but it doesn’t cover intentional acts, such as a guest deliberately damaging your property.
Relying solely on these programs is risky because they have significant exclusions and limitations. It’s best to consider them as supplemental protection, not a replacement for your own dedicated short-term rental insurance policy.
Umbrella Insurance
An umbrella insurance policy can provide an extra layer of liability protection beyond your existing coverage limits. This is particularly useful for short-term rental owners, as it covers claims that exceed the liability limits of your other policies, such as short-term rental or homeowner’s insurance. Umbrella insurance can protect your personal assets in case of a major lawsuit, providing peace of mind for a relatively low cost.
At Navisure Insurance Group, we always stress long-term value over short-term cost savings when it comes to insurance so that our clients do not experience unpleasant surprises when an accident happens.
Commercial Property Insurance
If you own multiple short-term rental properties or rent out your property frequently, your insurer may consider this a business, in which case you might need commercial property insurance. This type of insurance covers buildings used for business purposes and includes coverage for property damage, liability, and loss of income. It’s similar to short-term rental insurance but is generally more comprehensive for properties used exclusively as rentals.
Contents Insurance
Guests can be very careless with furnishings and belongings during short-term stays. Contents insurance covers the cost of repairing or replacing furniture, electronics, and other valuables in your rental property. This type of coverage is often excluded from standard homeowners or landlord insurance policies, so It’s important to ensure it’s included in your short-term rental policy.
If you do not do your research on insurance before you join the trend of renting out your property for short-term rentals, you may find yourself in trouble with your insurance provider, significantly underinsured, or without insurance entirely. Even if you’re renting your home just once, you can’t afford to jeopardize your coverage.
Talk to us at Navisure Insurance Group first about what is and isn’t included in your policy. We can help you determine what’s needed to fill the gaps so that you can enjoy the benefits of your short-term rental property while protecting that property, your finances, and your peace of mind.
COREY VANDERMEER | PRESIDENT
Corey started his insurance career in the claims department for a national carrier and learned the basics of insurance coverage and how it’s applied. From there he decided to take the jump into sales and joined an independent insurance agency. Here he learned how to build coverage around the needs of each individual and cater to every client. When Corey decided to start an insurance agency he did so with the intention of simplifying the process of getting insured. With a focus on technology and simplicity; his goal was to create an insurance agency that was different from those currently dominating the market place.
When he’s not working, Corey enjoys golfing, fly fishing and spending time with his wife and kids. Together they enjoy traveling to Northern Michigan and to his wife’s hometown of San Francisco.