Today, with companies like Airbnb and VRBO, there are many opportunities to earn extra income with a short-term rental. And with most businesses, there is always some risk. Whether you have a standalone property, garage or basement, it is important to be informed about protecting your property.
Here are five things you should know about short-term rental insurance:
1. Don’t assume your homeowner’s insurance policy will cover short-term rent.
Some homeowner policies may include short-term rent depending on what percentage of the year it was rented. Most won’t. Review your policy with your agent to fully understand what is and isn’t covered. A short-term rental endorsement may be available to add to your homeowner policy, or an independent policy may be required.
2. Traditional landlord policies will not cover the same short-term rental requirements.
Traditional landlord policy covers long-term rentals/leases. They also require tenants to carry out a rental insurance policy to transfer some of the liability to the tenant. For example, with your landlord’s policy if your tenant slips and falls in the shower, they are liable for the claim. If someone on your short-term tenant slips and falls into your bathroom, you could be held liable.
3. Understand what the host company offers.
Some host companies, like Airbnb and VRBO, may offer their own insurance or reimbursement plans. For example, Airbnb has a landlord protection plan that pays up to $1 million to landlords for property damage caused by tenants. This is not insurance, and Airbnb says it does not cover cash and securities, collectibles, artwork, jewelry, pets, or personal liability.
4. Consider increasing the scope of your liability with an insurance policy.
Your liability risk will definitely increase with a short term rental. You may be better off increasing your liability protection with an umbrella policy, or increasing your limits with an existing policy.
5. Talk to your dealer for the best solution for you.
Each short-term rental situation is different, depending on the type of property, the length of the lease, the landlord company you are working for, and other factors. Even if you allow family or friends to stay at your property for $0, there is still a risk. Discussing your unique situation with your agent is important to know the best options available to you to protect your assets and reduce risk.