Airbnb or VRBO—What Insurance do I Need?

By | 2018-04-02T01:11:58+00:00 March 27th, 2018|

One of the most popular income opportunities for homeowners are short-term rentals. With this income opportunity comes risk. It’s wise to look at how this risk can be managed with insurance. Some questions you may have are:

  • What happens if a tenant steals my property?
  • What if there is damage done to my home?
  • What if someone is injured at my residence?

These are all questions that need to be addressed to properly insure your property as a rental.
 
Not All Insurance Companies Cover It
In many cases, insurance companies will not cover short-term vacation rentals. They have an “exclusion” in their insurance documentation stating they will not cover any claims resulting in the home being rented on a short-term basis. If you remember the previous blog about Uber/Lyft, anytime you start obtaining income through your personal property, it is considered “business use.” Business use and short-term rentals have a different risk factors. In most cases, it’s not something insurance companies are willing to cover on a standard home owner’s policy.

ACTION STEP – Ask your insurance agent if your homeowner’s insurance policy includes short-term vacation rental coverage.
 
If it’s Covered, it Probably Won’t Include Theft
From our experience, many insurance companies that do offer coverage for Airbnb or VRBO rentals will have limitations on the theft portion of their coverage. Theft on short-term vacation rentals is high. As a result, insurance companies don’t cover much because they typically pay more in claims for these scenarios.

ACTION STEP – Ask your insurance agent what the limits are for theft if you rent your home short-term. If limits are too low, you may need to be careful with what you leave in the home.
 
Increase Your Liability Coverage
As mentioned in our umbrella insurance blog, one in 12 American have a chance of being party to a lawsuit. If you decide to rent a property on Airbnb or VRBO, your chances of being sued increase dramatically. Therefore, it’s wise to increase the liability limit of your rental property insurance policy to the maximum amount.

ACTION STEP – Call your insurance agent and max out the liability portion of your rental property insurance policy.

BONUS ACTION STEP – Call your insurance agent and purchase an inexpensive umbrella policy.
 
Thinking about renting your home short-term? Schedule an appointment with our agent, Brandon Ream, below. He would be happy to answer your questions to ensure you are properly covered.


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