Short-term rentals have grown in popularity in recent years, and Airbnb currently has 5.6 active listings worldwide. Short-term rentals can be an attractive alternative to traditional hotels. Travelers are increasingly attracted to more amenities and more comfortable surroundings, often at lower prices.
This type of rental can also generate additional income for landlords. However, before you decide to rent out part of your home for vacation rentals, you should consider how your short-term rental will be covered by your home insurance policy. Managing a vacation rental from your primary residence is considered a business venture and is therefore rarely included in existing homeowners insurance. This means that separate coverage is required to adequately cover property and liability risks.
Who is short-term rental insurance for?
Short-term rental insurance is generally only required if you have guests in your home. Not applicable to family and friends staying for free. Most basic home insurance covers non-business guests.
Short-term rental insurance is designed to cover property risks and liabilities while you rent your home. For example, if a paying guest gets injured and sues you, your short-term rental insurance should step in to protect you financially. Designed for residential use and not for annual rentals to the same tenant. You need home insurance for this.
Short-term rental insurance explained
Many insurance companies offer short-term rental insurance as a supplement. This means that coverage is added to your current home insurance policy. However, some companies may need to obtain a separate policy to cover short-term rentals. Whether you rent a room in your own home or another house on private property, this coverage protects your property in the event of an accident.
Depending on your insurance company, you may only be able to pay for a guest’s stay at your property. Choosing one of these companies can save you money if you plan to offer the property as a timeshare only.
Common short-term rental coverage includes:
- loss of income
- Excessive use of public services
- Liability for alcoholic beverages
- identity theft
For short-term rental insurance, you can check with your current homeowner’s insurance company to see if they offer a policy or supplement. If you can’t get coverage from your current provider, find another home insurance company and compare rates and coverage.
Hosting as Tenant
Homeowners aren’t the only ones to benefit from the short-term rental market. If you are currently renting an apartment or house and want to sublet it as a vacation home, you should also consider insurance. If you want to furnish an entire apartment or just one room, check your rental agreement first to see if the landlord prohibits subletting.
If subleasing is permitted and there are no other prohibitions, additional insurance cover should be considered. Ideally, you already have home contents insurance. If not, consider completing a policy before becoming a host. Then look for a second policy that covers your business as a host. Like homeowners, renters may need to view this coverage as an additional supplement to their current insurance or purchase separate insurance outright.
Companies that offer short-term rental insurance
If you decide to sign a short-term rental contract, you should first compare the offers of different companies. This not only helps you get the best price on your plan, but it also helps you get the specific coverage you want.
Some of the top companies that offer short-term rental insurance include:
- Non-life insurance
- Main insurance
- national health insurance
- successful insurance
How much is the short term rent?
Many factors determine short-term rental rates. Like the condition of the house, the location of the property also plays an important role. In general, most of the variables that affect homeowners’ insurance premiums also affect short-term rental agreements.
These factors include proximity to fire stations, local crime rates, insurance records, and types of materials used in the home. Insurance companies generally view renting out your home or part of it as a risk. Insurance is risk-based, so the premium charged by the company will depend on the perceived risk of a particular rental situation.
Alternative options for securing short-term rentals
An alternative to short-term rental insurance that you might consider is homeowners insurance. However, this type of policy is typically designed for long-term rentals. Some insurance companies may not offer insurance for homeowners unless they plan to have the same tenant for a long time.
Another option is to find insurance that covers both your home and your short-term rental. This type of coverage can streamline the process and potentially save you money.
What Airbnb Host Insurance Really Covers
When you book a property through Airbnb, you are automatically entitled to coverage, although this may not offer as much coverage as short-term rental insurance.
When you become an Airbnb host, you are covered by Airbnb’s Host Protection Insurance. This coverage includes primary liability coverage up to $1 million for personal injury or property damage. It also covers damage caused by guests in common areas such as building lobbies.
This coverage does not include property damage due to environmental factors such as mold, intentional damage or injury, or loss of income. If you need a claim, you must contact Airbnb first.
In addition to coverage insurance, hosts are automatically covered by the Airbnb Host Guarantee. This covers all property and listed property damages up to $1 million. However, this is not considered an insurance policy and Airbnb still recommends that you purchase additional insurance to protect your listing.
In short, get the protection you want
If you’re considering becoming an Airbnb host, approach the process as a business owner. You might try to make a little extra money or make it a full-time business. Short-term rental insurance is an important part of your financial planning when considering joining the vacation rental community.