MMA Blog

5 Things to Know About Insuring a Short-Term Rental

These days with companies like Airbnb and VRBO, there is much opportunity for earning extra income with short-term rentals. And with most enterprises, there is always some risk. Whether you have a stand-alone property, garage or basement unit, it’s important to be informed about protecting your asset.

Here are five things you should know about insuring a short-term rental:

 

1. Don't assume your homeowners' insurance policy will cover a short-term rental.

Some homeowners’ policies may cover a short-term rental depending on the percentage of the year it is rented. Most will not. Review your policy with your agent to fully understand what is and is not covered. A short-term rental endorsement may be available to add to your homeowners’ policy, or a stand-alone policy may be needed.

 

2. A traditional landlord policy will not cover short-term rental claims the same.

A traditional landlord policy covers long-term rentals/leases. They also require the tenant to carry a rental insurance policy that transfers some of the liability to the tenant. For example, with a landlord policy if your tenant slips and falls in the shower, they are responsible for the claim. If someone renting your short-term rental slips and falls in your shower, you may be liable.

 

3. Understand what the host company offers.

Some host companies, like Airbnb and VRBO, may offer their own insurance or reimbursement plans. Airbnb, for example, has a host protection plan that pays up to $1 million to a host for property damage caused by a renter. This is not insurance, and Airbnb says it does not cover cash and securities, collectibles, are artwork, jewelry, pets or personal liability.

 

4. Consider increasing your liability coverage with an umbrella policy.

Your liability risk undoubtedly increases with a short-term rental. Ramping up your liability protection with an umbrella policy or increasing your limit with an existing policy may be advised.

 

5. Talk with your agent to get the best solution for you.

Each short-term rental situation is different, depending on the property type, length of rental period, the host company you are working with and other factors. Even if you are allowing family or friends stay at your property for $0, there is risk. Discussing your unique situation with your agent is vital to knowing the best options available to you for protecting your asset and lowering your risk.

 

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This content is for informational purposes only.  Consult your actual insurance policy for details regarding terms, conditions, coverage, and exclusions.

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