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Airbnb Umbrella Insurance (2024): How to Properly Cover Your Short-Term Rental

If you have a short-term rental property like Airbnb, finding the right insurance policy is crucial. Remember, insurance companies view your rental as a business, so regular homeowner’s insurance won’t cover your property or your guests.

Airbnb Umbrella Insurance

I have several Airbnb properties, so I spent a lot of time researching which insurance companies offer the best coverage for short-term rentals. When choosing an insurance policy for your rental, it comes down to two choices:

  1. An umbrella policy that supplements your homeowner’s policy
  2. A policy specifically meant for short-term rentals that will replace your homeowner’s policy.

Keep reading to find out which kind of insurance policy provides the best protection for hosts, properties, and guests.

What type of Airbnb umbrella insurance policy will adequately cover my Airbnb?

The best type of insurance policy for a short-term rental property is a policy that is explicitly geared towards short-term rentals and replaces a regular homeowner’s policy. A dedicated short-term rental insurance company understands the type of coverage that you need as a host. It ensures that your rental property is protected as a house and as a business.

Proper Insurance- Vacation Rental Insurance for Hosts
Get your 5-minute quote from Proper Insurance! Just click the button>>

What is an Airbnb Umbrella Policy?

An umbrella policy, sometimes called excess liability coverage, is additional coverage that can be added to your current insurance policy to increase your liability limit. This type of coverage protects you if a third party is injured on your property.

Many landlords invest in an umbrella policy to cover their rental properties and tenants. Some common scenarios that landlords would rely on umbrella insurance include:

  • A tenant is injured on the property
  • A third party sues for damages caused by a tenant
  • A third party is injured on your vacant rental property
  • Paying legal fees

The main problem with relying on umbrella insurance to cover your rental property is that most insurance companies that provide umbrella policies don’t cover liability incurred by business activities. If your rental property operates as a separate entity under an LLC, your personal umbrella policy might not cover your rental.

Some companies allow an umbrella policy to supplement a landlord insurance policy, but this still requires you to have a separate insurance policy from your regular homeowner’s policy.

Insurance Companies that Offer Umbrella Policies for Rental Properties

There are several insurance companies that offer an umbrella policy for rental properties, but remember, if you are renting your property out as a business, you will need to have either business insurance or landlord insurance along with these policies.

USAA Rental Property Insurance

USAA covers both long-term and short-term rentals and offers protection that many standard home insurance policies don’t provide. USAA’s home share coverage will protect you if you are renting out just one room or an entire house.

  • Income replacement coverage
  • Personal liability coverage
  • Discounts on tenant screening services
  • Does not cover tenant’s personal possessions
  • It does not cover flood damage
  • Rental property must be occupied to be covered

Slice “On-Demand” Rental Insurance

Slice offers on-demand insurance, and you can get an instant quote online. When your property is rented, you will opt-in for insurance and only pay for the dates the insurance is needed. There are also monthly subscription policies, and you can add home share coverage.

  • Only pay for the coverage you need
  • Claims can be submitted and settled all online
  • Does not replace your homeowner insurance
  • You must remember to start coverage every time you have guests
  • Extra fees for additional coverage outside of basic replacements

Airbnb Host Liability Insurance

Airbnb offers its own liability insurance that provides hosts with $1 million in coverage for specific incidences. The great thing about Airbnb Host Liability is that every host is automatically covered, so you don’t have to sign up or pay extra. This policy will cover hosts if they are found legally responsible for bodily injury to a guest, damage to guest’s property, damage to common areas caused by a guest.

If you want to learn more about insurance companies that provide Airbnb coverage policies, check out our Top Five Insurance Providers for Hosts.

  • No opt-in required
  • Covers co-hosts and cleaners
  • Free liability coverage
  • Lengthy claims process
  • Very strict exclusions
  • Does not cover negligence

Why are Short-Term Rental Policies Better Than Umbrella Coverage?

Short-term rental policies are designed with business in mind and cater specifically to hosts who rent out a home or property to generate income. Rather than having a homeowner’s policy, landlord policy, and business policy, insurance companies that provide short-term rental insurance cover all these bases.

Check out our Short-Term Rental Insurance article to find out which other insurance companies provide policies to cover your vacation rental.

Short-Term Rental Insurance from Proper Insurance

Proper Insurance is a short-term rental insurance company that provides hosts with a “one-stop shop” policy that replaces a homeowner’s policy and includes business liability coverage. As the nation’s leader in short-term rental insurance, Proper Insurance understands specialized rental property coverage needs.

You will be able to choose different levels of coverage depending on your property’s purpose, and you will be covered in four ways:

  1. Commercial coverage for when you are hosting guests
  2. Personal coverage if you are using the property
  3. Tenant coverage for long term rentals
  4. Coverage even when the property is unoccupied

Proper Insurance even provides coverage for specialty issues that plague hosts, like damage as a result of bed bug infestations and lost property due to theft by a guest.

For a more in-depth look at Proper Insurance and everything, their policy has to offer, read our Ultimate Proper Insurance Review.

Proper Insurance- Vacation Rental Insurance for Hosts
Get your 5-minute quote from Proper Insurance! Just click the button>>

The Bottom Line

There are multiple ways to insure your short-term rental property. You can purchase an umbrella policy to extend your coverage limits; however, you must remember that these policies will not cover your rental if it is operated under an LLC as a business. Even with umbrella coverage, you will need to purchase a landlord or business policy to protect yourself, your property, and your tenants.

A short-term rental property policy from an insurance company like Proper Insurance will be tailored to meet the specific needs of a rental business. This type of policy is the best way to protect your rental property. A policy from Proper Insurance will replace your current homeowner’s policy and allow you to have commercial, personal, and tenant coverage all under one policy.

Regular insurance companies do not understand the specific needs and implications of hosting a short-term rental property. To adequately cover your Airbnb and protect yourself from liability lawsuits, you need coverage from an experienced short-term rental insurance company like Proper Insurance.

Ryan Drew- Contributor
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Ryan Drew- Contributor

I'm an Airbnb Superhost sharing my Airbnb journey and tips that I've learned along the way.

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