Bad things can and do happen. Insurance is designed to provide protection when they do. As the owner/operator of a vacation rental business, you need to cover all your bases, including with a comprehensive vacation rental insurance policy. Even if your homeowner’s policy provides some protections it is unlikely to be adequate to cover the challenges of running a vacation rental business.
Even the best guests can accidentally injure themselves or cause a fire. A hurricane could leave your property flooded and condemned. If you don’t have an adequate guest screening policy, bad guests could leave you with property damage, bad reviews, and lost income. To cover these and other possible negative scenarios, you need a comprehensive vacation rental insurance policy.
Property damage is inevitable when operating a vacation rental business. Make sure your insurance policy covers both accidental and willful damage caused by guests to both the home and its furnishings.
Theft of belongings within the vacation rental property is an important consideration. Don’t underestimate the creativity of bad guests. They can find ways to take off with your most expensive possessions.
When a guest is injured while staying at your vacation rental, you may be liable for their injury. Ensure your policy covers accidental and willful injury.
Depending on where your property is located you may want to include protections against natural disasters. If your property is in Destin, Florida for example, you should consider insuring against floods and hurricanes.
The travel industry is subject to sudden changes, going from boom to bust in a matter of days at times as seen with the recent global pandemic. Insuring yourself against guest cancellations due to sudden incidents such as natural disasters, security situations or pandemics can protect your business from a sudden end.
If you want to cover your bases and protect your property and business, don’t expect a comprehensive policy to be cheap. You can however be smart about picking the biggest risk factors for your business, taking into account any areas that may already be covered by your homeowner’s and/or OTA policy, if available, before choosing the policy and coverage. In general however the cost of vacation rental insurance depends on a number of factors: Location (state, city, zip code)
Type, size, value, and age of the property
Value of furnishings
Other business activities conducted (for example, Airbnb Experiences)
Number of guests that can be accommodated
Average occupancy rate and revenue
The vacation rental industry is growing. A 2021 Realtor.com survey found that nearly half of Americans would be interested in renting extra space in their homes while 53% of homeowners would rent their homes to boost savings.
Meanwhile, 32% of homeowners have experimented with various approaches to earning additional income from their properties while 85% would invest to create additional space. Despite the shift in homeowner attitudes as they attempt to tap into traveler interest, insurance solutions that specifically cater to vacation rentals are few and far behind.
A good vacation rental insurance policy will contain components of a homeowner’s policy, landlord’s policy, and commercial business policy, ensuring you are provided protection across the board of your business. Here are picks for the best vacation rental insurance for 2022, covering the full spectrum of policies available.
Proper Insurance is a leader in short term rental insurance in the US. Underwritten by Lloyd’s of London, it has provided short term rental insurance in all 50 states. Endorsed by VRBO, its policy covers all types of vacation rental homes, from townhouses and condos to duplexes, cabins, cottages, apartments, etc. It is accredited by the Vacation Rental Management Association (VRMA) and credit rating agency AM Best.
Proper’s short term rental insurance policy is tailored to the vacation rental market, covering the property, its contents, commercial business liability, and business income. It also takes into account the different uses of the property and covers it when used as a commercial short term vacation rental, when used personally, when occupied and when guests/tenants stay for more than 30 days.
Special cause of loss (all-risk) for building and contents
Replacement cost valuation (new for old)
$1,000,000 of commercial general liability standard
Optional $2,000,000 of commercial general liability
No limit on damage caused by a guest
No limit on theft or vandalism
Liquor liability coverage for host
Liability extended to amenities such as pools, hot tubs, bicycles, exercise equipment, small watercraft, etc
Actual loss sustained business income coverage
No time limit on loss of income
Bed bug enhancement which triggers lost business income
No occupancy restrictions
Higher premium if host lives on the property
CBIZ is the largest insurer of short term vacation rental properties in the US. It is also the very first US insurer to develop a short term vacation rental insurance policy and has been insuring vacation rentals since 2002. An $850 million New York Stock Exchange traded company, CBIZ’s vacation rental insurance policy is underwritten by Tudor Insurance which is rated A- by AM Best. CBIZ’s policy combines a standard home insurance policy with a rental insurance policy for guests and is available in all 50 states. It covers a variety of property ownership types, from individuals to trusts, and property types. Over its two decades in operation, CBIZ has developed a reputation for good customer service.
Commercial general liability aggregate of $2,000,000 with up to $1,000,000 per occurrence
$1,000,000 personal and advertising injury
$5,000 for guests’ medical payments
Legal fees related to defense
Replacement cost coverage for property and contents
Property damage caused by guest
Backup of sewer and drains
Amenities including swimming pools, hot tubs, docks, non-motorized watercraft, canoes, paddleboards, kayaks, bicycles, and exercise equipment
Additional structures on property
Loss of use and extra expense coverage
Loss of rental income
Property managers included at no extra cost
Safely is a digital insurer that integrates directly into OTA and PMS systems and also includes guest screening in its services. Its SafelyStay’s predictive analytics screens convicted felons, wanted persons, sex offenders, and identity fraudsters as well as running every booking through The List – a database of guests who are known to have caused damage to a home due to negligence. Safely also follows the pay-as-you-go model, covering the property and assets for each reservation so you don’t have to pay for insurance when your vacation rental is used by owners or not being used at all. Safely promises an easy and transparent process and painless claims processing. It takes an average of 5 minutes to submit a claim online with 80% of claims being paid within 4 days. Safely short term vacation rental insurance is accredited by the Vacation Rental Managers Association (VRMA) and the Better Business Bureau.
Integrates with Airbnb, VRBO, and Booking.com
Integrates with [Hostaway](https://hospitality.insuraguest.com/hostaway?utm_source=hostaway "https://hospitality.insuraguest.com/hostaway?utm_source=hostaway")
Includes comprehensive, non-intrusive guest screening
Up to $1,000,000 in damage to home structure and guest injury
Up to $10,000 for damage or theft of contents
Cost can be as low as $8 per night
Policy activated and costed only when guests are checked in
InsureStays is a dba of Sandhills Insurance Group and specializes in the insurance needs of vacation rentals, property management, and corporate housing. It partners with multiple underwriters and technology providers to deliver insurance services. Its highly rated underwriters include Nationwide, Certain Underwriters at Lloyd’s of London, and Berkshire Hathaway Specialty Insurance Company. Its online distribution and service support is powered by Rental Guardian. InsureStays policies are valid for short term stays, i.e. those lasting 30 days or less and policy holders can file claims online. Coverage limits are generally dependent on the fee structure chosen. InsureStays supports the various needs of vacation rental owners and property managers by offering a choice of policies: Property Protection – Contents Only (Flat Rate) covers accidental property, furniture and appliances damage by guests
Property Protection + Homeowner Liability + Bed Bug (Flat Rate) is listed as a damage protection fee and paid for by the traveler. It covers accidental property, furniture, and appliance damage by guests and provides liability coverage in case of accidental injury of a guest
Property protection + Liability Protection (Daily Rate) covers accidental property, furniture, and appliance damage by guests and provides liability coverage in case of accidental injury of a guest. It also covers major damage caused by guests
Fort Fiji Real Property & Liability Protection (Monthly Rate) provides liability coverage in case of of accidental injury of a guest and covers property damage such as kitchen fire
Fort Fiji Renters Insurance (Monthly Rate) covers replacement or repair cost of contents, guest medical bills in case of injury and cost of hotel bill if the home is damaged and left uninhabitable
Fort Fiji Vacation Rental Home Insurance (Yearly Rate) covers loss from natural phenomena like earthquakes and lightning as well as vandalism, loss of permanently installed or attached fixtures and certain other structures, personal property of owner, enhancements, loss of income due to peril or declaration of civil authority, and legal liability for bodily injury or property damage of guests. It also provides liability coverage for others’ property damaged by guests.
InsuraGuest is an insurtech company that provides digital insurance solutions for short term vacation rentals. A first payor policy, it covers accidental guest injury, property and contents damage, and theft. Because InsuraGuest integrates with a number of property management systems, the nightly charge for protection is automatically attached to each reservation and passed on to the guest. It also activates and deactivates the policy with guest check-in and check-out, respectively. IsuraGuest policies are underwritten by a number of insurance partners including but not limited to Crum & Foster, Suitelife Underwriting Managers, and Insure Idaho. Users can file claims online and track claim status via email.
##Conclusion Getting insurance for your vacation rental is pivotal and choosing the right policy for your property and business is crucial. Take into account the different concerns and level of risk of each with regard to your vacation rental. For example, the pay-as-you-go model is usually more cost effective than mainstream insurance policies, but can leave you with a hefty bill for damages or theft when guests are not booked in. Also, consider the mix of insurance policies available to you. While some may prefer a single policy that takes care of everything, others may opt for a mix of policies that leverage different risks at different levels. Furthermore, while listing platforms like Airbnb offer insurance type coverage to hosts, relying on them completely is risky. They can lack in customer support and claim processing and payouts are left to the discretion of the platform rather than an insurance provider. No matter your decision however you should also ask guests to sign a short term rental agreement when they book with you to ensure you are further protected from their activities. This can also act as a deterrent to bad guests and help keep your insurance premiums low.