You may already have a rental property that you can't wait to host tenants in. But there's always a risk of several different incidents when you invite the public to rent from you. Unfortunately, your guests may not leave your place in the same condition they found it, which could create huge potential losses for you without the right coverage.
If you're renting out your home or other property for any length of time, you'll need to make sure you’re protected. An independent insurance agent can help you find the right short-term rental insurance coverage to protect your property from damage or destruction caused by your tenants. But first, here's a breakdown of short-term rental insurance, what it covers, and when it's necessary.
What Is Short-Term Rental Insurance?
Short-term rental insurance is a specialty coverage or endorsement that’s added to a homeowners insurance policy to protect you and your personal belongings from damage due to a number of causes. This coverage may also go by several different names, such as:
- Vacation rental insurance
- Vacation property insurance
- Vacation rental property insurance
Short-term rental insurance only applies if you'll be renting out a property for a term that your insurance company considers to fall within that category. If you're renting out your property for six months or more, you'll need a different kind of coverage, such as landlord insurance or rental dwelling coverage.
Further, if you plan to turn your property into a short-term rental on a regular basis, this would constitute a business requiring a different policy entirely, such as hotel insurance or bed and breakfast insurance.
What Does Short-Term Rental Insurance Cover?
Short-term rental insurance covers potential disasters that may extend beyond obvious examples. Your paying guests may even cause an insect infestation or attempt identity theft.
Luckily, short-term rental insurance can cover many different types of risks. This coverage usually protects the following:
- Your personal belongings: This coverage includes property damage, destruction, or theft of your personal belongings stored on the premises by your renters.
- Liability costs: Short-term rental liability insurance coverage includes reimbursement for legal costs if you are sued by your renters for claims of bodily injury or personal property damage while they're staying at your residence.
- Dwelling damage: This coverage includes property damage to the dwelling or structure of your home or other rental property caused by fire, vandalism, etc.
These are just the basic coverages provided by many short-term rental endorsements. An independent insurance agent can help you add any extra coverages you may need.
Is Short-Term Rental Insurance Required?
Short-term rental insurance isn't mandatory by law, but it's crucial coverage to have if you'll be allowing renters to stay on your property. Without the right extra coverage or endorsement, you could be stuck paying repair or replacement costs out of your own pocket if your guests cause damage.
You might also find yourself on the wrong side of a lawsuit filed against you by your guests if they claim to have been harmed by or on your property, or if they've experienced damage to their personal belongings.
Does Homeowners Insurance Cover Short-Term Rentals?
Your homeowners insurance most likely will not cover property damage or liabilities arising from a short-term rental situation. Standard homeowners policies often have exclusions about renting in general. That's why it's important to work with an independent insurance agent to find the right coverage to protect yourself and your property if you decide to rent it out.
Why Do You Need Short-Term Rental Insurance?
Short-term rental insurance is required to protect your home or other property if you choose to rent it out for what your insurance company considers a short amount of time. If you rent your home through a service like Airbnb, the coverage provided by that platform likely isn't enough to fully protect you. Your home insurance also doesn't provide enough coverage to protect you from renters' damage.
Further, Airbnb accounts for just a percentage of short-term rental properties. Short-term rental coverage is important to protect hosts from expenses resulting from various disasters, including fires, theft, guest injuries, plumbing breaks, and more.
Who Needs Short-Term Rental Insurance?
You may be wondering, "Do I need short-term rental insurance?" Property owners who choose to rent out all or part of their property to paying guests use short-term rental coverage to protect themselves in many ways.
Here are just a few common uses for short-term rental insurance:
- Reimbursement for renter-caused property damage: Whether it's accidental or malicious vandalism, short-term rental insurance can cover the costs of property damage caused by your renters.
- Reimbursement for theft by renters: If your renters steal your belongings, other property, cash, etc., short-term rental insurance can help recover the cost.
- Reimbursement for renter injuries caused by your pet: In case your renters get injured or have their belongings damaged by a pet on your property, fortunately, short-term rental coverage often includes pet liability.
- Reimbursement for bed bugs brought by renters: If you have the unfortunate experience of renting to guests who bring bed bugs into your home or other property, luckily, short-term rental insurance can help cover the costs of treatment. While this coverage is typically excluded from most insurance policies, there are a few companies that offer endorsements to cover this type of exposure.
These are just a few examples of how short-term rental insurance can protect you after a disaster. An independent insurance agent can provide many more.
Does Airbnb Insurance Cover Guest Damage?
Yes, Airbnb's host damage protection coverage can provide reimbursement of up to $3 million for incidents of guest damage to your property or belongings during their stay. Airbnb host insurance coverage can also reimburse hosts for additional required cleaning services, such as removing stains left by guests or their pets.
Cleaning services may also be required for odor or smoke removal. An independent insurance agent can help you find the right Airbnb insurance for hosts or Vrbo insurance for hosts if you participate in either of these services.
How Much Does Short-Term Rental Insurance Cost?
The cost of short-term rental coverage can depend on a number of factors. For starters, it may depend on whether you need separate coverage or can add it to your home insurance as an endorsement.
Short-term rental insurance often ranges from $2,000 to $3,000 per year, but the cost can depend on which carrier you go through and other factors. An independent insurance agent can help you find exact quotes for short-term rental coverage in your area.
Best Short-Term Rental Insurance Companies
Short-term rental insurance is available from many different insurance companies, and the best way to find the right carrier for you is by working with an independent insurance agent to complete a short-term rental insurance policy comparison.
Though many insurance companies could offer short-term rental coverage for you, finding it could also depend on the area you live in. Here are a few of the top companies for short-term rental coverage.
| Best Short Term Rental Insurance Companies | Overall Carrier Star Rating |
|---|---|
| Progressive |
|
| Nationwide |
|
| American Family |
|
| Farmers |
|
| Allstate |
|
Why Work Together with an Independent Insurance Agent?
An independent insurance agent can simplify the process by shopping and comparing insurance quotes for you. These agents also have access to multiple insurance companies, ultimately finding you the best short-term rental coverage, accessibility, and competitive pricing. And down the road, your agent will still be there to help you file claims or update your coverage when necessary.
Sources
https://www.iii.org/article/coverage-for-renting-out-your-home
https://www.stratosjets.com/blog/airbnb-statistics/
https://www.macrotrends.net/stocks/charts/ABNB/airbnb/revenue#:~:text=Airbnb%20revenue%20for%20the%20twelve,a%2077.38%25%20increase%20from%202020.
https://smartasset.com/insurance/short-term-rental-insurance-costs
https://www.airbnb.com/help/article/279
