An Owner’s Guide to Insurance for Your Short-Term Rentals

animated hand reaching out from laptop screen and holding a houseIt’s undeniable that since the COVID-19 pandemic the demand for short-term rentals has gone up. In fact, between October 2020 and October 2021, demand increased by 35.8%, with even larger increases expected for 2022.

This is particularly the case in places that are smaller and more vacation-friendly, such as the Jersey Shore. If you own a home that you could rent, now is the perfect time to make some extra money through short-term house rentals.

While it’s a joy to earn more money through your property and make use of a place that you love, it’s still essential to make sure that you have insurance coverage that protects you. Let’s explore what you need to know when it comes to short-term rental insurance.

What Is Short-Term Rental Insurance?

Short-term rental insurance is a type of insurance policy that protects owners of short-term rentals. While there are different types of coverages you can choose from, they all aim to protect you if something happens at your rental, including injury, theft, damage, and certain other circumstances.

Short-term rental insurance is critical when it comes to protecting your financial well-being if you are renting your property to someone else. A number of problems can occur that could trigger protection through your insurance policy.

This insurance will protect you financially in the event that your rental property is damaged or destroyed, or if someone is injured while staying at your property. Without this insurance, you could be left with a huge financial burden.

It is important to note that there is a difference between vacation rental insurance or short-term rental insurance and second home insurance.

If you own a home in addition to your primary residence and don’t use it to generate income, you would want to carry second home insurance or possibly condo insurance, depending on the property. This is similar to standard homeowners insurance.

Why Do You Need It?

Short-term rental sites such as Airbnb and VRBO do offer some protection. However, they are basic policies that don’t cover all of the potential risks you face.

Intentional property damage and theft of cash or securities are commonly not covered by these sites. In addition, the policies offered by rental sites are usually insufficient if there is a major issue.

Homeowners insurance is designed to protect against common issues faced by homeowners. It is not designed to protect a business. From a legal perspective, if you rent your home for more than 14 days a year and earn money, you qualify as a business and may not be protected by your homeowner’s policy.

Short-term rental insurance is not the same as regular homeowners insurance. It is specifically designed to cover the unique risks associated with renting out your property on a short-term basis.

What Coverage Should You Look For in a Short-Term Rental Insurance Policy?

As a short-term rental owner, you want to be sure that your property is properly protected in case of any accidents or damages that may occur while it is being rented out. There are a few key areas of coverage that you should look for in a short-term rental insurance policy.

Property damage coverage will protect you in the event that any damage is done to your property by your tenants. One of the benefits of this coverage is that it covers both accidental and intentional damage.

Liability coverage will protect you in the event that your tenants cause any damage to other property or injure someone while they are staying at your rental.

If a guest or other person is injured, you could be on the line for thousands of dollars of hospital bills. However, liability coverage would protect you in this instance.

Coverage for loss of income can also be helpful. This coverage will protect you in the event that you are unable to rent out your property because of damage or other unforeseen circumstances. For example, loss of income may have helped property owners at the height of the pandemic.

These are just a few of the key areas of coverage that you should look for in a short-term rental insurance policy. Be sure to speak with your insurance agent to discuss your specific needs and find the policy that is right for you.

How Much Does Short-Term Rental Insurance Cost?

Rental insurance for a short-term rental typically costs between $2,000 and $3,000 per year. However, the actual cost will vary depending on the location, type of property, and frequency of rentals.

For example, a vacation rental in a popular destination may cost more to insure than a city apartment. In fact, insurance for a tourist destination such as California could be up to $9,000.

You’ll also be able to adjust your cost based on some aspects of your policy and property. Choosing a higher deductible can give you a lower premium. Different included coverages will also change the price. Certain amenities as well as a more expensive property, on the other hand, can increase your premium.

When choosing a short-term rental policy, it’s important to work with a knowledgeable insurance agent. They will be able to help you choose what coverage and other choices will work the best with your needs while staying within your budget.

Protect Your Short-Term Rentals with Insurance

As short-term rentals become more popular it’s important to protect yourself from financial loss. Policies from rental websites don’t offer enough protection, but short-term rental insurance does.

If you’re ready to protect your property and your pocket, contact McMahon Insurance Agency for a quote today.