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.
These are the five main areas your insurance policy should cover:
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 the home, its furnishings, outdoor areas and other amenities like swimming pools.
Vacation rental properties are at risk for theft. 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 or other injuries during their stay.
Depending on where your property is located you may want to include protections against natural disasters. For example, if your property is in Destin, Florida, 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’s policy such as Airbnb’s Aircover, if available, before choosing the policy and coverage.
In general however the cost of vacation rental insurance depends on a number of factors:
The vacation rental industry is growing. A 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 specifically catering to vacation rentals are still 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, providing comprehensive coverage.
Here are our picks for the best vacation rental insurance for 2024, covering the full spectrum of policies available.
Proper Insurance is a leader and pioneer in short term rental insurance in the U.S. 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), credit rating agency AM Best and S&P Global.
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.
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 works with a number of A.M. Best Rated A+ carriers. It covers short and long term rentals and a variety of property ownership types including individuals, LLCs, estates and corporations. It is available in all 50 states.
Safely is a digital insurer that offers a 3-step claims process. It provides insurance services through On Demand Insurance Agency, LLC.
Safely integrates directly into OTA and property management software systems. Interestingly, it also includes guest screening, verifying guest identity and checking them against court records, criminal databases, watchlists and its proprietary database of bad guests.
Safely also follows the pay-as-you-go model, only covering the days you have bookings so you don’t pay for when you have no occupancy. It pays 80% of claims within a week.
Safely short term vacation rental insurance is accredited by VRMA and the Better Business Bureau. It is currently only available in the U.S. but set to expand to the U.K., Europe, Australia and Canada soon.
InsureStays 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 FORTEGRA. Its online distribution and service support is powered by Rental Guardian.
InsureStays is available in the U.S. and more.
InsureStays policies are valid for short term stays, i.e. those lasting 30 days or less and policyholders can file claims online. Coverage limits are generally dependent on the fee structure chosen.
InsureStays offers a choice of policies:
Property Protection – Contents Only covers accidental damage to property contents by guests
Liability Bundle Protection – Covers accidental damage of property contents, homeowner liability for accidental injury of guest or third-party and bed bug infestation
Homeowner Protection – Includes coverage for accidental damage of property contents and property, host liability for accidental injury of guest or third-party and bed bug infestation. Pricing is daily or per stay.
Fort Fiji Homeowner Protection – Covers traveler lawsuits, guest liability, medical payments to guests, neighbors and tenants liability, property and contents damage and bed bug infestation
Fort Fiji Comprehensive Package Protection – Covers damage to property structure, damage to neighboring premises and tenant properties, guest medical payments and guest injury. Per day pricing.
InsuraGuest is an insurtech company that provides digital insurance solutions for short term vacation rentals. It covers accidental guest injury, medical, property and contents damage and theft.
InsuraGuest integrates with a number of property management systems so full or part of the charge for protection can be automatically attached to each reservation and passed on to the guest. Coverage can be deactivated and reactivated at any time. Significantly, the provider does not care who is at fault when providing payouts.
IsuraGuest policies are underwritten by Crum & Foster and available in all 50 U.S. states and Canada.
Getting insurance for your vacation rental is necessary. Choosing the right policy for your property and business is crucial.
Take into account the different risk factors that affect your vacation rental property, business and yourself. Consider your price ceiling and revenue strategy as well as the different policies and coverage models offered by each provider.
For example, the pay-as-you-go model can be less costly if your occupancy levels are not high. They can also be more attainable for vacation rental hosts just starting out or only operating a single unit. On the other hand, an umbrella policy that provides comprehensive coverage provides peace of mind and may also mean you don’t have to pay for homeowner’s insurance.
Whatever the provider and policy you decide on, support it by asking guests to sign a short term rental agreement and use guest screening to minimize needing to claim insurance payouts in the first place.