Last Updated on June 19, 2023 by Rental Recon
As an Airbnb owner, you likely already know you need rental insurance to protect against liability claims and cover your property from damage, but do you know how to compare short-term insurance quotes? When your rental property sustains damage or theft, you want to be sure your coverage resolves the issues so we’ve come up with a list of steps to help you compare quotes.
Here Are The Steps to Compare Short-Term Rental Insurance:
Step #1: Determine the Coverage Gaps.
Step #2: Check the Multi-use of the Property Stipulation.
Step #3: Coverage of the “free’ Airbnb Host Protection
Step #4: Investigate Commercial Insurance for Airbnb Rentals.
Step #5: Evaluate Commercial vs. Personal Insurance Liability.
Step #6: A Landlord Policy vs. Short-Term Rental Insurance.
Step #1: Coverage Gaps in Short-Term Rental Insurance
When you decided to rent your primary home or another dwelling in your possession, you might have chosen to add an Airbnb home-sharing endorsement to your current homeowner’s policy. While this seems like a good choice, relying on a homeowner’s policy is not adequate coverage. You need a more vigorous policy to insure your rental.
Coverage gaps can leave you in a lurch but a comprehensive policy can ensure you don’t miss any important limitations, exclusions, or gaps like the following:
- Some insurance policies pose limitations on liabilities like liquor, communicable disease, hot tubs, other amenities, and pets.
- Vandalism and damage by renters.
- Property and liability coverage about bed bugs.
Step #2: Multi-Use of Property
When you sometimes live in your home, rent it as an Airbnb, and occasionally your home is unoccupied, this is triple-use of a home. Most insurance companies want a home to be for one use and the policy reflects that single use. They will on occasion add riders to cover the out-of-the-norm use but this can leave uncertainties in coverage.
When you participate in short-term rentals, you need coverage to include:
- Loss of business income due to bed bugs.
- Coverage that is active despite your home being vacant or rented for part of the year.
- Coverage without concerns or exclusions.
Step #3: “Free” Airbnb Host Protection
Free Airbnb host protection offers 1,000,000 liability protection for each booking through the website. However, the 10,000,000 aggregate on the policy means that when you combine all the claims, the policy is exhausted. In theory, the aggregate could be met in weeks with the number of Airbnb rentals around the world.
Since Airbnb is the orchestrator of the policy, they get to decide when and where coverage will apply. This means that your claim might not be covered because they need to stay under the aggregate total.
Step #4: Commercial Insurance for Airbnb Rentals
Depending on whom you ask, you will get various answers on what is covered under a homeowner’s insurance policy with attached riders. Some insurance agents will assure you that a landlord’s insurance policy or a dwelling policy is sufficient, but when those policies are interpreted, you may not get the extensive coverage you need.
Here are the reasons commercial insurance is best for Airbnb rentals:
- It is the only policy that gives extensive coverage for Airbnb rentals.
- It covers the serious financial risks you take when opening your home to renters.
- It covers the liability exposure you have when people are renting your home.
Step #5: Commercial vs. Personal Liability Insurance Coverage
Commercial and personal liability insurance coverage is designed to ensure you and your property. the reality is that short-term vacation rentals are like hotels where people staying there constitute a business for you.
Most personal homeowner’s insurance policies won’t cover commercial activities. This means that your claim can be denied (even with the riders) if the insurance company decides renting to other people is a commercial activity.
Suppose a short-term vacation rental guest slips and falls on your front porch and sustains an injury and they hold you liable. Your homeowner’s policy would not provide coverage because this happened when your home was operating as a business. Commercial liability insurance would cover this incident because your vacation rental is no different from a hotel operating as a place for guests to stay.
Step #6: Landlord Insurance Policy vs. Short-Term Rental Insurance
Most landlord insurance policies prohibit business pursuits (i.e., short-term rentals). Many times, you will end up with a landlord policy termed an Airbnb insurance policy. They are limited in coverage and leave you with gaps that can cost thousands of dollars out of pocket.
Here are some coverage gaps that will require you as the owner to pay for repairs and damage that happen during a rental:
- Loss of rental income due to bed bugs
- Sewage and drain backups
- Intentional vandalism and theft by renters
- Liabilities like communicable diseases and pet damage
- Included amenities like a hot tub or bikes
- Damage to your home and property
Every time you rent your home to a paying guest, you are opening yourself to financial risk that can multiply into thousands of dollars. You are often unaware of the limitations of your short-term rental insurance policy, which can spell your demise.
Why You Should Consider Proper Insurance for a Short-Term Rental Unit
When you open your home to strangers, there will inevitably be some damage or repairs that need attention. Since you are essentially running a small business, having sufficient coverage targeted to your short-term rental can give you tremendous peace of mind.
Proper Insurance is different from other insurers in the following ways:
- It is tailored directly to peer-to-peer rental interactions.
- You can add optional coverage for bed bug infestations, animals or pets, liquor use, invasion of property, and more.
- Their commercial package covers property, liability, and income.
- Liability: $1,000,000 of commercial general liability per occurrence with a $2,000,000 per occurrence option.
- Liability covers amenities like pools, spas, bicycles, jet skis, and more.
- There is no limit on vandalism by a renter, including theft and other intentional acts.
Get a quick 5-minute Proper insurance Quote here…>>
Make sure to check out our article on the best short-term rental insurance providers for hosts here….>>
