Short-Term Rental Insurance Options: Homeowners, Landlord, and Commercial Compared
Insurance is a contract between you and the insurance company. It’s equally important that you, as the property owner, understand the contract you’re signing—especially when short-term renting introduces risks that most standard policies aren’t built to cover.
We’ll walk you through all three insurance options available to short-term rental owners, explain where each one falls short, and show you what comprehensive STR coverage actually looks like.
If you are interested in having an insurance expert compare your current policy to the unmatched coverage by the Proper Insurance policy, we are more than happy to do so.
Understanding Short-Term Rental Insurance Options for Property Owners
Insurance is a crucial component of managing a short-term vacation rental, given the unique exposure to a variety of risks that come along with the industry. It may be helpful to think of insurance as the transfer of risk from you, the short-term rental owner, to the insurance company, so that if/when something happens, you aren’t on your own to shoulder the financial burdens. Risk is what still exists after you think you’ve thought of everything.
Here’s how each of the three options compares—and why most STR owners end up needing a different kind of policy than they started with.
Homeowners Insurance (HO-3): Coverage Built for Owners, Not Hosts
Homeowners insurance is intended for primary, owner-occupied residences. It provides coverage for the building, personal property “contents”, loss of use, and personal liability.
Although it is still limited in scope, this could be an option for a short-term rental owner only if it is their primary residence (where they live and receive their mail). It’s recommended to add a home-sharing endorsement to this type of policy, but there are still major limitations in coverage.
It’s important to note that even with a home-sharing endorsement, a Homeowners policy will not provide adequate protection, if any protection, when it comes to liability coverage; guest-caused damage, theft, or vandalism; invasion of privacy; and back-up of sewerage and drains. This should not be an option if the portion of the home you are renting is separate from the main house, like an ADU, as there may be a business activity exclusion for other structures.
Homeowners policies may also have limitations on the number of days per year you can rent a property and/or the income you generate from the property. If you rent a space in your primary home frequently or have a detached ADU that you rent like a detached garage, you should consider a commercial insurance policy like the one offered by Proper Insurance.
Landlord Insurance (DP-3): Built for Tenants, Not Short-Term Guests
Landlord insurance is intended for tenant-occupied properties. It covers the building, personal property/landlord furnishings “contents”, loss of rent, and premises liability. There is an option to add an STR enhancement to some Landlord policies but that still has its limitations and falls short in providing comprehensive coverage for short-term vacation rentals.
Common insurance gaps in a DP-3 policy are that it only provides coverage for liability incidents on-premises, meaning things that take place on your property. So, if you have a waterfront property and the guest drowns while swimming in the lake, you’d have no coverage. If a guest slips and falls due to the ice on the street outside of your home, you’d have no coverage, as it’s beyond your property line. Additionally, there is no coverage for: intentional damage, theft, or vandalism caused by a guest; common exclusions for liquor liability; and pet, animal, and wildlife liability.
There is also limited coverage for business income as a DP policy only provides “loss of rents,” which is calculated based on all rentals in the area, including long-term rentals. This means that if it’s your peak season, you’d receive drastically less than your actual revenue. This is a huge limitation if you rely on the business income your short-term rental property generates. Loss of rent is also typically capped at 12 months.
If you frequently rent your property, you will want more specific coverage to the risks of a short-term rental like the comprehensive policy offered by Proper Insurance.
Commercial Insurance (CP/CGL): The Only Policy Built for Your STR Business
Commercial insurance policies are designed for business purposes, offering protection for the building, business/personal property “contents”, loss of income, and Commercial General Liability. This type of insurance is more suited for short-term vacation rental properties, as, after all, operating a short-term rental is a business.
Proper Insurance sells a commercial policy for homeowners that addresses specific risks of short-term renting, including guest-caused damage, liability coverage on and off-premises, squatter protection, bed bug and flea protection, loss of business revenue, and more.
What’s the Best Insurance Option for Short-Term Rental Owners?
Proper Insurance created a Commercial Homeowners policy tailored specifically for short-term vacation rental properties is known as the best STR insurance. Think of the Proper policy as Homeowners insurance, Landlord insurance, and Commercial insurance all combined into one.
We provide comprehensive coverage for the specific risks of a short-term rental operation and commercial general liability. Our expert vacation rental underwriters can tailor a policy specific to the needs of your short-term rental property. Proper Insurance covers all property types, including homes, townhouses, condos, duplexes, cabins, cottages, and apartments and insured homes in all 50 states.
Proper Insurance vs. Standard Homeowners (HO) vs. Landlord (DP): Which Policy Covers Your Airbnb Business?
Not all insurance policies are created equal — and for short-term rental hosts, the difference between the right coverage and the wrong one usually shows up at claim time. Homeowners Insurance, Landlord Insurance, and a home-sharing endorsement each leave meaningful gaps when paying guests are involved. The table below shows exactly where each policy stands on the coverage that matters most to STR hosts.
| Coverage | Proper Insurance | Homeowners Insurance (HO) | HO + Home-Sharing Endorsement | Landlord Insurance (DP) |
PropertyProperty example: A natural disaster occurs like a tree falling on your home. |
Homeowners Insurance: Exclusion for business activity
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HO + Home-Sharing: If your Airbnb is not your primary home, your HO coverage with an endorsement is likely null and void.
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Damage, theft and vandalism by a guestDamage, theft and vandalism example: Guest throws a party and damages the contents of the home and structure |
Landlord Insurance: Covers theft and vandalism if NOT by your Airbnb guest (property entrustment). Limited contents coverage.
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Liability on premises Liability on premises example: Guest slips and falls exiting the shower at your rental. |
HO + Home-Sharing Endorsement: If your Airbnb is not your primary home where you live, your HO coverage, even with an endorsement, is likely null and void.
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Liability off premises Liability off premises example: Guest gets injured while off your property line (like at the beach of your waterfront rental or guest burns your neighbors house down/dog bite – someone gets hurt off property ties it back to you) |
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Replacement costs Replacement costs example: Roof damage from a covered cause of loss |
Proper Insurance: Pays pure replacement cost – the full amount needed to replace damaged item (new for old). No depreciation deducted.
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Homeowners Insurance: More often than not this would be responded to, however the business activity exclusion found in HO policies could result in no coverage.
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HO + Home-Sharing Endorsement: Typically, pays “actual cash value,” which includes depreciation. The insurer may pay you only $10,000. If this is not your primary home, you may receive $0.
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Landlord Insurance: Typically, pays “actual cash value,” which includes depreciation. The insurer may pay you only $10,000.
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Loss of income Loss of income example: A claim occurs at your property that takes your Airbnb out of business |
Proper Insurance: Provides a check for the actual revenue lost up to the limit of your choosing.
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HO + Home-Sharing Endorsement: Some endorsements may extend limited coverage to use “loss of use” as “loss of rents.” However, you may not have enough to cover additional living expenses and loss of income.
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Landlord Insurance: Provides a check for “loss of rents,” which is based on the average from your area, including long-term rentals.
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Liability for amenities Liability for amenities example: If a guest gets injured or worse from your provided bikes, kayaks, pool, hot tub, etc. |
Landlord Insurance: Only covers amenities that are confined to your property line.
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Vacancy Vacancy example: Damage occurs at the property during the shoulder season or period of vacancy |
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Invasion of privacy Invasion of privacy example: House cleaner accidentally walks in on a guest before they check out |
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Airbnb squatterAirbnb squatter example: A person rents your property for one week but overstays their checkout period by three months and is now protected by law as a tenant |
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Bed Bugs Bed Bugs example: Liability from bed bug bites and the cost to exterminate them |
Get a Free Coverage Comparison
Proper Insurance is the nation’s leading short-term vacation rental insurance provider, with the most comprehensive policy on the market. We protect homes in all 50 states with unmatched coverage for your property, revenue, and business liability, customized to include guest-caused theft/damage, liquor liability, amenity liability (bikes, kayaks, hot tub, etc.), bed bugs and fleas, squatters, and more.
Give us a call at 888-631-6680 to receive a comprehensive coverage comparison, or submit a request for a 3-minute quote today.
Frequently Asked Questions about STR Insurance
What’s the best insurance option for STR owners with multiple listings?
If you own multiple short-term rental properties, the coverage structure that works for a single primary residence becomes even more inadequate. Homeowners policies cover one owner-occupied property — they’re not designed to scale across multiple rental units. Landlord policies carry the same STR gaps described above, and personal umbrella policies won’t fill those gaps either.
A commercial policy is the only option built to cover multiple STR properties individually, each with full property, liability, and business income protection. Our underwriters can tailor limits per property based on your actual revenue, location, and risk profile. See how Proper’s coverage held up when one host’s five properties needed it most.
What are the key policy features to look for in a dedicated short-term rental insurance product?
Not all short-term rental insurance is created equal, and the difference often comes down to what’s in the fine print. Before you commit to a policy, here are the features that actually matter.
A commercial coverage form, not a homeowners endorsement. A true STR policy is written as a commercial policy — not a modified homeowners policy with a home-sharing add-on. The commercial form covers the building, contents, liability, and business income under a single contract built for the risks of hosting paying guests. Learn why a home-sharing endorsement isn’t enough.
Guest-caused damage with no sub-limit. One of the most common coverage gaps in STR insurance is a sub-limit on guest damage — often $10,000–$25,000 on policies that otherwise advertise full coverage. A dedicated policy should cover guest-caused damage up to your full property limits, with no separate cap. See how Proper handles guest-caused damage coverage.
Commercial General Liability that extends off-premises. Standard landlord and homeowners policies cover liability only on your property. STR liability doesn’t stop at your property line. Look for Commercial General Liability coverage with a minimum of $1 million per occurrence.
Actual loss sustained for business income — with no time cap. You need income protection that pays what you actually earn, not a loss-of-rents calculation. And you need no 12-month cap on payments. Rebuilds after major losses routinely take 18–24 months. Understand the difference between loss of use, loss of rents, and loss of business income.
Coverage for STR-specific risks. Liquor liability, bed bugs and fleas, pet and animal liability, squatter protection — these come with every booking and are excluded from nearly every standard homeowners and landlord policy. A policy built for STR hosts should include them by default. See the full scope of short-term rental liability risks.
How do I insure a condo used as a vacation rental?
Condos present a unique challenge—most condo association master policies cover the building structure, not your unit’s interior or the liability that comes with renting to guests. A standard HO-6 picks up the interior, but carries the same business activity exclusion as any homeowners policy: the moment paying guests are involved, coverage can be denied.
If your condo insurer excludes short-term rental guests entirely, you need a commercial STR policy that starts from a clean slate. Learn how to build the right insurance stack for a condo STR, or see why Homeowners policies fall short for rental properties specifically. Proper Insurance covers condos in all 50 states with the same comprehensive property, liability, and business income protection as a single-family home.
How can I find reliable coverage when my condo insurer excludes short-term rental guests entirely?
This is one of the most common situations we see: a host discovers mid-policy, or worse mid-claim, that their insurer’s business activity exclusion voids coverage the moment a paying guest checks in. It’s not a gap you can patch. Understanding how habitability exclusions work is the first step to knowing why a policy replacement—not an endorsement—is the only real fix.
Proper Insurance’s commercial policy replaces your existing homeowners or condo policy entirely — not as an endorsement layered on top, but as a standalone commercial contract that covers guest stays, liability on and off the premises, and business income if a covered loss takes your unit offline. See how Proper compares to other STR insurance providers, or call 888-631-6680 for a free coverage comparison.
