City leaders across the US seek to regulate short-term rentals in a way that directly helps their community. Cities such as Austin, TX have strict regulations in order to maintain available housing for long-term renters and individuals wanting to settle down in their community. However, many families bring in extra income by short-term renting their primary residence or investment property.

For some individuals, short-term renting is a way to complete the American Dream. An article in Spring 2018 discussed a couple who moved from Lebanon to Texas to begin a real estate business while relying on their short-term rental income for their small family. With the strict regulations in Austin, they struggled to keep their business thriving.

The main concern at the time was whether to define investment properties as business or residential and to regulate them accordingly. This matter was discussed in Texas Supreme Court which shows how far reaching the argument is over short-term rentals.

Rob Henneke, the lawyer for the aforementioned couple, advocates regulations state-wide rather than city to city: “If short-term rentals are going to be regulated, it should be at the state level to ensure statewide consistency and to protect property owners from a patchwork quilt of overly burdensome regulations at the local level.”

Following this case with analysis gathered in Spring 2019, the numbers show the rise of short-term rentals in Austin which brought over $3 billion in revenue into the Texas state economy in 2018.

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Local Regulations and Insurance

Proper Insurance is the nation’s leading insurer for short-term vacation rentals and meets and exceeds local regulations and requirements. Many cities such as Newport, OR are introducing insurance requirements of $1,000,000 liability insurance for all short-term rental operators. With such a requirement there is a higher standard for owners creating a barrier to entry and eliminating non-professionals.

With a requirement for commercial general liability insurance, the owner and the city both have peace of mind knowing they are accurately covered for their business activity.

Proper may also add the city to the policy as additionally insured. If cities adopt this additional insured requirement for coverage, the city will have protection in the event a plaintiff names them as a defendant in relation to bodily injury or property arising out of short-term rentals in the city.

To learn more about how insurance fits with local regulations give Proper a call today at (888) 631-6680!

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