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So you’ve finally decided to make the most out of your home (or second home) and start monetizing it as a short-term vacation rental. As a host, you know that this involves a lot of hard work and preparation. An unfortunately oft-overlooked aspect of converting a home into an Airbnb is insurance. Sadly, the majority of homeowners insurance policies do not have any provisions for rental agreements. In fact, your policy can even be terminated by most companies if they discover that you are now using your home as a place of business.
Thankfully, there is a plethora of short-term rental insurance companies on the market. The two companies I’ll be discussing today are Proper and CBIZ. Both companies are a complete replacement for your standard homeowners insurance. This means that instead of supplementing your coverage, which can often be more costly, you will cancel your current policy and enroll in a new one which covers both you and your renters.
Proper Insurance Vs. CBIZ…Who Comes Out On Top?
Both insurances replace standard homeowners insurance. Proper Insurance was founded by CBIZ employees, is underwritten by Lloyd’s of London, and allows you to choose your coverage amount. CBIZ is a large, publicly-traded company underwritten by Tudor’s Insurance that has standard coverage amounts with preset limits.
Both of these companies also offer several great features that make theme especially attractive to Airbnb hosts. Whether you’re just starting out or you’re growing your short-term rental empire, it is critically important to understand how to make the most out of your insurance policy in order to maximize your time and profits. Fortunately, as a Superhost, I have had a lot of experience navigating the world of rental insurance.
While both CBIZ and Proper offer many similar coverage options, there are a few areas where one shines over the other. Hopefully, my research will shed some light on the similarities and differences of these two companies and the services they offer. I’ll be going into an in-depth discussion of each option so that you can decide which one is right for your Airbnb rental.
Proper Insurance offers Airbnb & vacation rental hosts quality coverage at an affordable price. Reviews for Proper Insurance are strong, and their insurance is specific to short term rental situations--Not your standard landlord insurance.
- Lost rental income insured
- Founded by experienced rental insurance team
- No occupancy restrictions
- Exclusively endorsed by HomeAway and VRBO
- Premise coverage extends beyond the home
- Price increases if host lives on property
- Liability insurance bundled with commercial insurance
- Not on-demand coverage
|Replaces homeowners insurance||Replaces homeowners insurance|
|Underwritten by Lloyd’s of London Insurance||Underwritten by Tudor’s Insurance|
|Founded by former CBIZ employees||First to offer short-term rental insurance|
|Legal defense included in commercial liability limits||Publicly traded|
|Choose several coverage amounts||Standard coverage amounts with limits|
By the end of the article, you will have all the information you need to choose your new short-term rental insurance policy.
Proper Insurance and CBIZ Pricing
I reached out to both Proper and CBIZ to get a short term rental insurance quote. I gave them both the same information regarding my home size, home features, etc. I requested the same coverage limits from each company, and here are the results….. Essentially the same price for my home.
|Insurance Company:||Commercial Liability:||Personal Liability:||Quoted Rate-Taxes Included:|
|Proper Insurance:||$1,000,000/ $2,000,000||$1,000,000||$1,574.00 Yearly|
|CBIZ:||$1,000,000/ $2,000,000||$1,000,000/ $2,000,000||$1,574.88 Yearly|
Proper Insurance Review
Proper Insurance is another fantastic option for short-term rental insurance. They were actually founded by former CBIZ employees who wanted to branch off and form a company that specifically caters to short-term rental owners and managers. Proper describes themselves as an “all-inclusive insurance that was custom-penned with Lloyd’s of London and covers the unique risks associated with short-term vacation rental properties.”
The company has been Better Business Bureau accredited since September of 2015 and has tons of stellar reviews on their website. They also have an A+ rating. Proper Insurance is underwritten by Lloyd’s of London Insurance, which has been underwriting for over 325 years. Lloyd’s insures the majority of FTSE and Dow Jones industrial average companies, according to their website.
With the backing of such a longstanding and reputable company, clients can rest assured that their money is being well handled and well spent. In fact, it would be tremendously difficult to find another relevant business that has been around as long as Lloyd’s. While the short-term rental aspect of the market is relatively new, the experience of the insurance underwriters is invaluable as they have seen different markets and businesses come and go with time.
After seeing their impressive backing, rating, and company history, it should come as no surprise to learn that HomeAway and VRBO exclusively endorse Proper Insurance and no other short-term rental insurance agencies.
Proper Insurance is officially a commercial insurance policy. This point is mainly technical, as it also doubles as your own personal homeowners insurance policy. Like CBIZ, they are a full-coverage replacement for your current insurance. In fact, in the cases where your rental property doubles as your home, you get $1 million in personal liability coverage. This is separate from the business liability coverage you will receive as well, ensuring that you as a person are protected from liability just as well as your business is.
Additionally, you won’t be limited in your acceptance as a “name insured” by Proper based on your business’s status. They accept sole proprietors, partnerships, corporations, LLCs, and trusts. Whether you’re just a regular homeowner looking to make some extra money or part of a large property management company, Proper will have a policy that works for you and your needs.
The business liability coverage that Proper Insurance offers is quite extensive. Like CBIZ, you are able to insure any business revenue lost due to damages or necessary repairs. This feature is critically important, because as hosts we depend on our Airbnb rentals for income.
Income insurance also functions as a great “safety net” for those hosts who don’t have a steady stream of renters, such as those who rent exclusively during peak seasons such as ski rentals or beach rentals. For these hosts, a few weeks of lost income can amount to operating at a loss for the season, which is obviously disastrous. Thankfully, Proper helps us avoid this worry. Also, like CBIZ, Proper’s policies also include coverage for the income of property managers.
Their policy also does not have vacancy or standard occupancy restrictions like some, so your policy is still in effect no matter how many people are occupying the building. This offers hosts greater flexibility in deciding whether or not to make their rental function as their home. It doesn’t matter if you live there, if only your renters are there, or if no one is there: your policy still has you covered.
Another unique feature is that Proper lets the customer choose how much income to insure. That way, someone with a generally lower rental income isn’t paying an exorbitant premium to insure income they wouldn’t necessarily have earned in the first place. Likewise, hosts that earn higher amounts can pay a little extra each month to know that their revenue is safeguarded in case of an emergency or disaster.
As far as coverage related to physical property damage, Proper covers the standard building and its contents. They also go above and beyond by including off-premise liabilities. Things such as swimming pools, hot tubs, watercrafts, and recreational areas all create a significantly higher risk of accident or injury. Without proper underwriting, your policy could leave you on the hook for any damages incurred while one of your guests was utilizing one of your great amenities.
Proper also offers enhancement coverage for things you may not have considered. Pets and alcohol on the premises can both lead to disastrous damages. If not covered, you as a host could be held liable.
Another strong possibility (which every host hopes to never encounter) is the introduction of bedbugs into your rental. It can take weeks, or sometimes longer, to clear out these pests. Not to mention that they’ll probably lead to some unsavory reviews from anyone who encounters them. Luckily, Proper offers an optional bedbug enhancement for their policies. This will help you afford the costs of ridding your rental of these creatures and replacing contaminated items. Also, thanks to their income insurance, you won’t have to lose money in the process.
Even more serious issues, such as assault or invasion of privacy, can be underwritten as well. Proper’s team will work with you, the business owner, to thoroughly understand your options and help find the custom policy that fits your needs.
Sadly, one of the main purposes of insurance is to help business owners avoid litigation of disputes. If you find yourself in a legal dispute with a guest, your cost of legal defense is included in Proper’s generous $1,000,000/$2,000,000 commercial general liability insurance.
CBIZ has been in the vacation rental insurance game for quite some time. In fact, at first it was the only company offering short-term rental property owners insurance coverage specifically designed for them. It has since grown to be a large, publicly-traded company that offers a huge selection of insurance options outside of vacation rentals.
Some customers might feel more secure entrusting their money to a larger company. CBIZ’s policies are underwritten by Tudor Insurance, a national leading provider. In addition to CBIZ being a large, publicly-traded company, this can offer potential clients peace of mind. This company has been accredited by the Better Business Bureau since January of 2018 and has an A+ rating, but unfortunately no reviews. Nevertheless, it is always a comfort to know that the company you choose to work with practices business ethically.
Like Proper, CBIZ replaces your current standard homeowners insurance with a new policy that meets the needs of vacation rental owners. The policy is full-coverage. In essence, it is a two-in-one, covering both the host and the renters. This includes coverage in the cases where the home doubles as the host’s home. This means that you are able to use the policy like normal home insurance policy for your purposes, as well as a rental insurance policy for your guests’ purposes without having to separate them out.
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CBIZ does offer its customers some extra insurance benefits that appeal especially to Airbnb hosts. For example, their policy does allow for the host to provide a small amount of alcohol to guests without it being a liability issue. Obviously, this is a huge bonus for hosts and allows you to provide an amenity that many others may be unable to. The inclusion of a local bottle of wine, or maybe some craft beer, can really show guests that you went the extra mile to make them feel welcome during their stay.
Another feature that CBIZ and Proper both share is that, in the event that your rental is out of commission for repairs, your income is protected. Any income that you are unable to collect while your home is being repaired is covered under your short-term vacation rental policy.
This is an extremely important feature that many tend to overlook. Consider that if your property is “down” for repairs, even if those repairs are repaid by your insurance, you are still losing out on the money you could have made from renting if your property were not being fixed. Even though your losses from property damage are covered, your potential gains are not. With the right insurance coverage, you can ensure that your money coming in is just as protected as your money going out.
This also applies to a property manager’s commission, which is a great benefit. If you utilize a property manager and don’t have coverage that includes their income, it is possible that you could be on the hook for any lost income they might incur while your property is unable to be rented. Likewise, if you are a property manager yourself, you’ll want to be sure to opt for coverage that protects your income as well as the homeowner’s.
A bonus for CBIZ is that they pay for claim defense expenses on top your normal occurrence limits. This way, hosts can feel confident that, in the case of a lawsuit, their entire insurance coverage amount will not be eaten up by costly legal fees.
Unfortunately, every insurance policy does have limits. CBIZ has several limitations on things like claim amounts, reasons for repairs, and more. For example, they will only cover up to $25,000 in damage due to sewer and drain backups. You are also capped at $50,000 in additional living expenses incurred while your property is down for repairs if that property also functions as your primary residence.
More strikingly, they will only cover up to $5000 in medical expenses for any one person. Medical expenses due to injury at your property can certainly add up quickly, especially in the case where a hospital visit is required.
All in all, CBIZ is a reputable company that provides a multitude of insurance options for many purposes, including short-term rental insurance. Their BBB accreditation is an excellent feature, as is their policy’s allowance for the provision of alcohol to your guests.
Their coverage options can be somewhat limiting, however, depending on your specific circumstances. While we can never truly anticipate accidents, if your property is a bit more of a “high risk” (i.e., if it includes recreational vehicles, outdoor activities, or water activities), you might want to opt for a more flexible, higher-coverage option.
Final Thoughts About Proper Insurance and CBIZ
According to Proper’s website, “It’s the most comprehensive insurance available on the market today so you can have peace of mind”, and I would have to agree. When stacked against its competitors, I feel that Proper Insurance offers the widest variety of options in coverage and that this makes it most suitable to the needs of the majority of short-term rental owners.
While CBIZ certainly does offer an impressive variety of coverage, I don’t believe it can compete with the specialized care and tailored policies that Proper provides. This certainly makes sense, since CBIZ offers a vast swath of insurance, investment, and even healthcare business solutions, whereas Proper has a much narrower and unique focus. It is clear that CBIZ’s former employees who founded Proper did so with great intention and certainly improved greatly on CBIZ’s offerings.
If you’re ready to take the next step into transforming your home to a rental, head over to Proper’s website to get a quote in less than five minutes.
Do I Need Short-Term Rental Insurance?
The short answer is yes, you do. If you are considering operating an Airbnb or are already, your homeowners insurance provider is bound to find out. It is highly unlikely that you’ll be covered and may even lose your policy. Looking into a full-coverage option that bundles homeowners and short-term rental insurance like Proper should definitely be your next step.
How can I Protect Myself from Damages Caused by Guests?
Accidents do happen, but certain things can be avoided by taking a few easy steps. These include ensuring guests understand the rules of your property, especially properties that include other activities like swimming or camping. Make sure your policies on pets and alcohol are clear as well, as these are top offenders for property damage.
Does Airbnb Offer any Insurance Services?
Yes, but not in the same way as Proper or CBIZ. From their website: “All Airbnb hosts have the protection of liability insurance of up to $1 million USD to protect against third party claims for personal injury or property damage”. In other words, the host is protected from being sued by guests or if guests cause damage to the property up to $1 million.
However, certain circumstances are not covered by Airbnb’s Host Protection Insurance. These include damage caused by mold or pollution, as well as loss of earnings. Fortunately, most third-party short-term rental insurers do cover these events.