Short-term rental home insurance is a type of insurance that provides coverage for homeowners who rent out their properties to tenants for a short period of time. It has become increasingly popular as more people are using platforms like Airbnb and HomeAway to rent out their homes, apartments, or vacation properties to guests and is as such often referred to as vacation rental insurance or Airbnb insurance.
If you are considering renting out your property for short-term rentals, it is important to understand the risks and liabilities involved. A standard homeowner’s insurance policy may not provide adequate coverage for short-term rentals, as it is designed to cover owner-occupied homes. Therefore, it is important to have a separate insurance policy that provides coverage for short-term rentals to protect you against unexpected damages, accidents, or liabilities that may arise during a guest’s stay.
What does short-term rental home insurance cover?
Short-term rental home insurance typically provides coverage for a range of risks and liabilities, including:
- Property damage: This coverage provides protection against damage to your property caused by tenants or guests. It includes damage to the structure of the property, as well as any personal property you have in the home, such as broken furniture, accidental fires, or water damage.
- Liability: This coverage protects you against claims made by tenants or guests who suffer injuries or property damage while staying at your property. It also covers legal fees and court costs if you are sued.
- Loss of income: This coverage provides protection against loss of rental income due to damage to your property that makes it uninhabitable.
- Medical payments: This coverage provides payment for medical expenses if a tenant or guest is injured on your property.
- Additional coverage: Short-term rental home insurance policies may also offer additional coverage options, such as theft or vandalism caused by the guests/tenants, and natural disasters.
What is not covered by short-term rental home insurance?
There are some situations that are not covered by short-term rental home insurance policies, including:
- Intentional damage: If a tenant or guest intentionally damages your property, it may not be covered by your insurance policy.
- Illegal activities: If a tenant or guest engages in illegal activities on your property, such as drug use or theft, it may not be covered by your insurance policy.
- Wear and tear: Normal wear and tear to your property is not covered by your insurance policy.
- Flood damage: Most short-term rental home insurance policies do not cover flood damage. You may need to purchase a separate flood insurance policy if your property is located in a flood-prone area.
Types of Short Term Rental Home Insurance
There are several types of short term rental home insurance available to homeowners, depending on their specific needs and circumstances.
- Commercial Short Term Rental Insurance: This type of insurance is designed for homeowners who rent out their properties on a frequent or regular basis and consider it a business. Commercial insurance typically offers higher coverage limits than standard homeowners’ insurance policies.
- Vacation Rental Insurance: Vacation rental insurance is designed for homeowners who rent out their properties seasonally or occasionally.
- Home Sharing Insurance: Home sharing insurance is designed for homeowners who occasionally rent out a room or space in their primary residence.
- Landlord Insurance: Landlord insurance is designed for property owners who rent out their properties on a long-term basis, such as a year-long lease. However, some landlord insurance policies may also offer coverage for short-term rentals.
How to purchase short-term rental home insurance?
If you are considering renting out your property for short-term rentals, it is important to purchase a separate insurance policy that provides coverage for this type of activity. You can purchase short-term rental home insurance from a variety of insurance providers, including: Homeowner’s insurance companies, vacation rental insurance companies, online insurance providers such as Lemonade or Allstate.
Before purchasing a policy, it is important to research different providers and compare coverage options and prices to find the best policy for your needs.
Factors Affecting Short Term Rental Home Insurance Premiums
Several factors may affect the cost of short term rental home insurance premiums, including:
- Location: The location of the property may affect the premium, as areas with higher crime rates or higher natural disaster risks may be more expensive to insure.
- Frequency of Rental: Properties that are rented out frequently may have higher premiums than properties that are only rented out occasionally.
- Property Type: The type of property being rented out may affect the cost of the insurance premium. For example, a larger property with more amenities may be more expensive to insure than a smaller property.
- Coverage Limits: The amount of coverage selected by the homeowner will affect the cost of the insurance premium. Higher coverage limits will result in higher premiums.
- Insurance Company: Different insurance companies may offer different pricing and coverage options for short term rental home insurance policies.
Finally, considering the factors listed above, the average cost for purchasing short-term rental home insurance policies can range between $500 and $1,500 per year.