Like millions of others around the globe, you’ve decided to make the most out of your property by offering it as a vacation rental. This is great, and is becoming an ever more popular choice among people looking to make extra income.
However, did you know that you’ll now need to purchase additional insurance to make sure that you and your property are covered? This is known as vacation rental insurance, and there are tons of choices out there.
How do you get the best vacation rental damage insurance?
- Evaluate your insurance needs
- Decide if you need continuous or on-demand coverage
- Choose between an umbrella or replacement policy
- Get quotes from several companies including Proper Insurance
What Is Vacation Rental Insurance?
Vacation rental insurance is different than standard homeowner’s insurance. Homeowner’s insurance is basically personal liability insurance that also provides some coverage for the structure and contents of your home.
If you rent out your property in any capacity, even just one day, your homeowner’s insurance will stop coverage and can terminate your policy! This is why you need vacation rental insurance. It is a little pricier than regular homeowner’s insurance, but this is due to the increased liability and potential for damage to occur.
Thankfully, there are a ton of options available for vacation rental insurance. With the surge in popularity of sites like Airbnb, HomeAway, and VRBO many well-established companies have come up with policies that cater specifically to short-term rental operators as well.
There are a few distinct types of vacation rental insurance, and it is important to understand the differences before selecting a policy.
- Continuous coverage works like a traditional homeowner’s insurance policy. You’re always covered. This is a good idea for those with a high rental volume, which I’ll go into below.
- On-demand coverage, is, well, on-demand. You choose which days you want to activate your insurance coverage and when you want to turn it back off. This is much cheaper than continuous coverage, making is better for people who rent less frequently. However, these policies often have some limitations (see below).
- Some policies replace your current homeowner’s insurance whereas others are umbrella policies. Umbrella policies get “stacked” on top of your regular insurance to provide the commercial coverage you’ll need.
Rental Recon Tip: Be sure to be realistic about your rental’s needs, and be honest about the kind of income you make (or hope to make). For some people, an expensive policy would entirely cancel out their revenue or even end up costing them more money in the long run.
Make sure you use the best data available to decide on a policy. If you’re just starting out and don’t have a few months’ worth of spreadsheets to look at, consider checking out how booked similar rentals in your area tend to be, what they charge, and how they compare to what you offer.
Is Vacation Rental Insurance Worth It?
Vacation rental insurance is absolutely worth it. In fact, it is required. If you operate a rental property, your home is considered a business. Therefore your regular homeowner’s insurance, which is personal liability insurance, will not cover you and may even cancel your policy altogether.
Simply put, you need vacation rental insurance. It is simply a matter of finding the policy that makes financial sense for your unique situation.
- If your vacation rental is truly a full-time business, it makes more sense for you to invest in a full-time, continuous coverage policy. These policies typically replace your existing homeowner’s insurance and have provisions for commercial and personal liability coverage.
- If you host guests in your home for a few days a month, or just on the weekends, a full-time policy is likely overkill for your situation. Consider an on-demand policy such as the one offered by Slice (via Progressive). You simply activate the policy as needed and keep your normal homeowner’s insurance in the meantime.
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So How Much Does Vacation Rental Insurance Cost?
Obviously, this answer will vary a lot depending on several factors. The value of the home and its contents are usually the biggest variable. Like other types of insurance, it costs more to insure a higher value item.
Another factor that can influence cost is the typical occupancy of the home. Not all insurance companies change their pricing due to this, but some will ask for the amount of time that the property is owner-occupied versus renter-occupied. The higher the percentage of rental-occupied time, the higher the cost.
Lastly, continuous coverage (where your property is covered 24/7, 365) is going to be pricier than on-demand coverage. Most policies are continuous coverage, and these policies often replace existing homeowner’s insurance that you already have.
- Continuous coverage tends to run around $1500+ annually, whereas on-demand coverage can be just a few dollars a night! For more information on specific company’s quotes I was given for a sample property, look here.
Vacation Rental Insurance Companies & Reviews:
|Company||Continuous or On-Demand||Replacement or Umbrella Policy|
I’ve put together an overview of what each company has to offer down below. There are a lot of similarities between them, so I’ll try to highlight what makes each one different and which policies make sense in different situations. Be sure to get a personalized quote from a few companies before choosing an insurance provider for yourself.
- Very comprehensive
- Offers off-premise coverage
- You choose lost income coverage amount
- No occupancy restrictions
- Endorsed by HomeAway and VRBO
- Underwritten by Lloyd’s of London
Proper Insurance is one of the most comprehensive vacation rental insurance companies I have come across. They were actually founded by employees who left CBIZ (with which they now compete) to form a company dedicated to serving short-term vacation rental owners.
Since they are not a branch of a larger, broader-spectrum insurance company, Proper has tailored its services and has great policy and coverage options for all sorts of vacation rentals. I like that they offer off-premise coverage, which is especially important for vacation rental owners.
Proper Insurance is underwritten by Lloyd’s of London, a company with over 325 years of experience in the insurance business. Many customers feel more comfortable placing their trust in a larger and well-established business.
Check out our comprehensive Proper Insurance Review HERE….>>
Some policies only cover the actual structure of the home or its contents. Unfortunately, accidents and mishaps can (and do) happen outside of these parameters. For example, if you operate a beach rental and have canoes for guests to use, Proper covers injuries and damage that may occur on these whereas many other companies do not.
They also allow customers to choose the amount of lost income that they want to insure. This is another reason why you want to be realistic in your income expectations when choosing a policy.
If you insure a huge amount of money that you realistically wouldn’t be making, your premium will be higher. Choosing the correct amount to insure means that your price stays more affordable and that you’ll be guaranteed income in the case that you can’t rent out your property. Proper offers coverage for sewage and drain backups, certain natural disaster damage, damage caused by a guest, and several other situations.
I really like that Proper does not impose occupancy restrictions on its policies. This means what whether or not you live at the property, your policy is unaffected. There is, however, a price increase if the host also uses the property as a personal residence due to the need for additional coverage.
Finally, Proper Insurance is exclusively endorsed by HomeAway and VRBO. If you’re looking for a highly respected and specialized insurance provider for your rental property, you can’t go wrong with Proper. If you’re ready to explore what Proper has to offer, get a quick 5-minute quote here!
CBIZ Vacation Rental Insurance
- First company to offer short-term vacation rental insurance
- Larger, publicly traded company
- Some policies allow providing alcohol
- Legal defense expenses paid out in addition to normal coverage limits
- Low limits on claim amounts
CBIZ knows the vacation rental insurance game inside and out. In fact, they were the first company to even offer insurance for short-term rentals. They are a large and publicly traded company that customers can feel confident in trusting.
One unique feature of CBIZ’s vacation rental insurance policies is that many of them have provisions that allow hosts to provide alcohol to guests! Of course, this is at the host’s discretion, but can be a nice personal touch to offer.
Another great feature is that CBIZ pays out legal defense expenses in addition to normal coverage limits. With many other companies, legal defense and liability coverage are drawn from the same “pool” of money. If one side gets very expensive, you might find yourself coming up short on the other. CBIZ also has low limits on claim amounts, so you won’t be stuck footing multiple, smaller bills by yourself.
Check Out Our Other Articles on Rental Recon:
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Slice Vacation Rental Insurance (via Progressive)
- On-demand coverage
- Independent of homeowner’s insurance
- Liability coverage included; legal expenses additional
- Covers building and contents; all other protection additional
- Very low prices
Slice has partnered with Progressive to roll out a pretty fantastic on-demand insurance policy for short-term rental owners. It is an umbrella policy that is independent of homeowner’s insurance and covers liability, the building, and its contents by default. All other expenses and provisions must be added on.
The upside to covering slightly less than some other policies and only having users pay when needed is that Slice has some of the lowest prices on the market. Depending on the home and its situation, I have seen quotes that start at just a few dollars per night.
Obviously, this is very cost-effective and would make Slice a great option for someone who needs coverage but doesn’t want to see all of their earnings eaten up by an expensive policy.
Safely Vacation Rental Insurance
- Automatic when working with Safely
- Up to $1,000,000 in structure and liability protection
- $10,000 protection for contents and guest belongings
- Simple claim filing process
If you work with Safely, you are automatically granted an umbrella policy that covers up to $1,000,000 in structural damage and personal liability. They also grant users up to $10,000 to insure the contents of the home and guest belongings, which is another great feature.
They have a very simple, hassle-free claims filing process and don’t make you jump through hoops to get reimbursed. Best of all, the policy is at no extra cost to Safely users.
Allstate Vacation Rental Insurance
- Allstate HostAdvantage Home Sharing Insurance
- Umbrella policy with coverage for home-sharing hosts against theft of personal belongings and up to $10,000 in damage per rental period
- Allstate Landlord Insurance
- Standard landlord insurance that has provisions to cover short-term rentals
- Dwelling protection with other structures coverage, liability, income protection, medical protection, vandalism and burglary coverage
- Can help cover the cost of renovations to bring building up to code
Allstate has two forms of policies available for vacation rentals. One is called HostAdvantage and functions as an umbrella policy (acts on top of regular homeowner’s insurance) to protect the contents of the home from theft or damage. This would be a good idea if your homeowner’s insurance allows renting and you just need a little extra coverage.
The other option is a standard landlord insurance policy that also allows short-term rentals. It covers the building itself along with other structures on the property. It also covers liability, lost rent income, medical expenses, and even vandalism and burglary. This policy would be a great fit for someone who needs a replacement instead of an umbrella policy.
American Modern Vacation Rental Insurance
- Three policy options
- Varying restrictions on age of home, property type, and occupancy
- Not all policies protect loss of rent
- Some policies protect only the structure
American Modern offers three different policy options for vacation rental insurance. Each of these policies differs slightly in coverage, and you’ll have to investigate to find out which one works best for your situation.
For example, some of the policies restrict the age of the home. In these cases, older homes, no matter what condition, would be completely excluded from coverage. They also place restrictions on the construction of the home and how many families it holds (i.e., can only be a single-family home).
Occupancy restrictions also vary, with some policies allowing the owner to live at the property and others forbidding it. Also, not all of the policies insure rental income. Some policies basically only protect the structure and nothing else. It’s possible that American Modern has a policy for your needs, but make sure to do your research.
Assurant Vacation Rental Insurance
- Partnered with Vacasa
- Supplemental to regular homeowner’s insurance
- Only pay when home is booked
- Low nightly prices
- Zero deductible
Assurant has partnered with Vacasa to provide an insurance policy that is supplemental to your standard homeowner’s insurance; in other words, an umbrella policy. It essentially offers liability and damage protection for things caused by guests in your home.
Even when using an umbrella policy, it is important to make sure that your homeowner’s insurance allows rentals. If not, you could be left high and dry when they cancel your policy.
Assurant’s vacation rental insurance is a very affordable, on-demand policy that allows you to only pay for the nights you need. They even have a $0 deductible, thus reducing out-of-pocket costs even further.
Evolve Vacation Rental Insurance
- Partnered with Assurant
- “Property Protection Plus” Insurance
- Covers up to $3,000 in damage or theft
- $1,000,000 in liability
- Do not need to file claims, only provide evidence
- Included for all Evolve owners
Good news for Evolve owners: you actually have insurance already! Evolve has partnered with Assurant, a Fortune 500 company, to create their vacation rental insurance.
Known as “Property Protection Plus”, this automatic coverage gives Evolve owners up to $3,000 in damages or theft as well as $1,000,000 in liability. The best part is that you don’t ever need to file a claim, just provide photographic evidence to Evolve’s support team.
It is important to note that this is considered an umbrella policy, and you’ll still need a comprehensive policy that allows for renting in addition to what Evolve provides.
Foremost Vacation Rental Insurance
- Landlord insurance
- Host cannot live at rental property
- One policy can cover multiple properties
- Underwritten by Farmer’s Insurance
- Liability coverage must be added on
- Only “house” type buildings, no mobile homes or tiny houses
Foremost’s vacation rental insurance is technically a landlord insurance policy. They do not allow the host to live at the rental property, which eliminates Foremost for a lot of Airbnb and other home-sharing owners.
However, if you own multiple vacation properties and do not live at any of them, Foremost allows you to put all of them on one policy. They are underwritten by Farmer’s Insurance, a large and reputable company.
They do not, however, include liability insurance in their coverage. This must be added on separately, which is important to note as liability is one of the most commonly used types of coverage. They also only cover “house”-like structures, so no mobile homes, tiny houses, yurts, campers, etc.
Geico Vacation Rental Insurance
- Landlord insurance
- For non-owner occupied properties only
- Additional coverage available on Geico Homeowner’s insurance for short-term rentals
- Covers property damage and structure on the property
- Lost rent protection
- Liability coverage
- Add-ons for vandalism protection and cost of bringing building up to code
Geico’s is also landlord insurance and covers properties that the owner does not live at. However, if you have Geico’s regular homeowner’s insurance, you can get additional coverage that allows for short-term rentals. This might be a more cost-effective option for those with a lower rental volume and who live at their rental.
Like most landlord insurance, their policy covers the structure, damage to the property, liability, and rental income during a covered loss. You can also add on protection for vandalism, and even the cost of remodeling the building and bringing it up to code. For a forward-thinking landlord, provisions like this make Geico very appealing.
HomeAway Vacation Rental Insurance
- HomeAway provides $1,000,000 in liability coverage
- Not a comprehensive insurance policy, just personal liability insurance
- Proper Insurance is HomeAway’s preferred vendor
Like several other vacation rental websites, HomeAway offers its hosts an umbrella liability coverage policy. They cover up to $1,000,000 in liability, which is significant, but not a comprehensive insurance policy. It is essentially personal liability insurance that adds on to whatever your existing policy provides.
For comprehensive coverage, HomeAway exclusively endorses Proper Insurance. They provide some of the most specialized and thorough coverage on the market and cater specifically to short-term rental owners.
Liberty Mutual Vacation Rental Insurance
- Liberty Mutual HomeSharing Coverage
- Can apply to homeowner’s, condo, or tenant insurance
- Not as comprehensive as other policies
- Covers lost rent up to $10,000
- Up to $1,000 coverage in property damage per occurrence
Liberty Mutual is another large insurance company that has recently begun offering vacation rental insurance options to its customers. Theirs is called HomeSharing Coverage, and can be applied to homeowner’s, condo, or tenant insurance.
It is definitely not a comprehensive, standalone policy. It is essentially an umbrella policy that modifies standard insurance to allow some home-sharing provisions. It only offers up to $1,000 in property damage (per occurrence), which is pretty measly compared to what other companies offer. They do, however, cover lost rental income up to $10,000.
Nationwide Vacation Rental Insurance
- May be able to modify homeowner’s insurance with a rider for infrequent renting
- More frequent renting requires standalone commercial or business policy
- Will need a custom quote for individual situation
Nationwide does not provide a ton of specifics on their website, but they do offer the ability to modify an existing personal homeowner policy to fit someone who rents out their home occasionally. This is great for the infrequent HomeAway user or someone who hosts short-term renters during a short window of time.
If you rent more frequently, you’ll need to purchase a regular commercial or business policy. You can contact one of their insurance agents for a quote to find a policy that fits your needs.
Safeco Vacation Rental Insurance
- Standard policy allows home to be used as a short-term rental
- Requires homeowner to live at property
- If homeowner lives elsewhere, requires a commercial policy
Safeco is pretty unusual in that their standard homeowner’s policy actually allows the home to be used as a short-term rental. Most other companies do not allow this and actually expressly prohibit it. This type of policy does require the owner to live at the property, so it is a great fit for people who use home-sharing websites or rent out one or two spare bedrooms.
However, if the owner does not actually reside at the property, Safeco requires that you purchase a commercial policy. This is pretty typical amongst insurance companies and might actually be a better fit for the needs of some vacation rental owners.
State Farm Vacation Rental Insurance
- Rental and condo insurance
- Covers dwelling, property, liability, and lost rent
- Does not cover several damage types, natural disasters, or animal damages
State Farm has recently added an endorsement to their rental insurance for short-term rentals. They had previously offered regular rental and condo insurance that covers property and building damage as well as personal liability and rental income.
An important thing to note is that there are several types of damage that are explicitly not covered by State Farm’s vacation rental insurance. Natural disasters, floods, earthquakes, and damage caused by animals of almost any sort are not covered at all. Depending on your area, this could be a huge drawback.
Travelers Vacation Rental Insurance
- May need different coverage for short-term rentals
- Mainly landlord policy
- Loss of rent coverage not always included
- Liability included, may add on extra liability umbrella policy
Travelers vacation rental insurance is essentially a landlord policy. They also state that you may need additional coverage or riders on your policy if you offer short-term rentals (which most vacation rentals are).
The policy seems to be pretty bare-bones when compared to a lot of other competing companies. For example, not all of their policies offer coverage for lost rental income. They do cover liability, but the other provisions seem to vary.
VRBO Vacation Rental Insurance
- $1,000,000 in liability coverage
- Can be added on top of existing liability coverage from 3rd party policy
- Not comprehensive
- VRBO recommends Proper Insurance
Similar to HomeAway and Airbnb, VRBO offers its users up to $1,000,000 in personal liability coverage at no additional cost to them. You can also “stack” this money on top of another policy (and you will need another policy, since VRBO’s is not comprehensive insurance).
For a third-party insurance provider, VRBO recommends Proper Insurance. Proper is tailored to fit the needs of vacation rental owners and fills in the gaps between a traditional homeowner’s policy and a commercial landlord policy. For more information, see the Proper Insurance section above.
Absolutely! Almost every company has an option for insuring a beach vacation rental. The premium would most likely be higher due to the increased potential for damages and the higher value of the home. You might also want to look into off-premise coverage, like what Proper Insurance offers, if your guests use any kind of recreation gear or outdoor spaces.
Also yes! In this case, I would recommend first checking with your condo association to see what policies (if any) are in place for renting out a property. Some associations also have some type of coverage already in place, but this usually doesn’t apply to rental properties and often only covers the exterior of the building.
This is a bit trickier. There is no specific “hurricane insurance”, but there is insurance for windstorms and floods, which are what would cause damage to the home itself. Flood insurance is available through the government only, and windstorm insurance can be expensive in high-risk areas.
You will need multiple policies to be covered from hurricane damage, and even then there may still be gaps. For more information, look here and contact an insurance agent at the company of your choice.