The Board of Commissioners passed the Final Short-Term Rental Code for Chelan County which will be taking effect on September 27th, 2021. The new code steams from months of tension between long-term residents and rental owners near some of Washington’s popular tourist destinations. Within the new code, there are regulations regarding zones allowed, the number of units allowed, operational standards, existing units, permit process, and a primary liability insurance requirement of no less than $1,000,000.
We understand that it can be overwhelming and stressful with a short time to get in compliance with the new code and that’s why we are here to make that process easier. At Proper Insurance, we have same-day binding authority, so if you are looking to fill this requirement, we can make it happen.
NEW Short-Term Rental Insurance Requirement
The Final STR Ordinance Code, states that “Liability insurance shall be obtained consistent with RCW 64.37.050 as of the effective date of this ordinance (September 27, 2021) per Subsection (3)(N)”. For those who aren’t familiar with the Washington State Legislature, RCW 64.37.050, states that:
“A short-term rental operator must maintain primary liability insurance to cover the short-term rental dwelling unit in the aggregate of not less than one million dollars or conduct each short-term rental transaction through a platform that provides equal or greater primary liability insurance coverage. Nothing in this section prevents an operator or a platform from seeking contributions from any other insurer also providing primary liability insurance coverage for the short-term rental transaction to the extent of that insurer’s primary liability coverage limits.”
As stated above the Board of Commissioners is requiring that every short-term rental owner have primary liability insurance of no less than a million dollars. Most short-term rental owners carry $300,000-$500,000 in liability coverage, which is not enough. At Proper Insurance, we provide our clients with $1,000,000 in commercial general liability per occurrence with a $2,000,000 per occurrence option. Not only would our policy meet the new insurance requirement but will also correctly cover you and your rental business if something were to happen.
Many hosts believe that their umbrella policy would be applicable in this situation BUT there is a common misconception that a $1,000,000 personal umbrella will suffice this requirement which is simply not true for two reasons. First, your underlying policy must be fully exhausted for an umbrella to kick in, and many short-term rental hosts simply do not have the correct underlying insurance, so the claim never gets to the umbrella. Many short-term rentals homes are insured on policies that have business activity exclusions which means it more than likely wouldn’t respond to a claim, to begin with. Second, an umbrella is not the primary liability coverage limit so it would not suffice the new Chelan County insurance requirement. You will need to show proof of $1,000,000 in liability coverage limits before any umbrella.
In the new ordinance, it states ‘or conduct each short-term rental transaction through a platform that provides equal or greater primary liability insurance coverage’, meaning that if your rental platform provides you with a supplemental or ‘free’ coverage plan, like Airbnb’s Host Protection Insurance and Host Guarantee, then you would meet the Chelan County insurance requirement. Proper believes that this section of the ordinance should be removed because in reality you would NOT be adequately insured with a policy like that. If you’re not familiar with Host Protection, it is essentially a free $1 million policy that Airbnb gives to owners for each property listed on the site. Free insurance plans often come with so many exclusions that it’s difficult to get reimbursement for a claim. With the Airbnb Host Guarantee, you have a short window of time to file a claim, and it comes with all sorts of other caveats. Plus, the Host Protection Insurance is a shared policy. That means tens of thousands of property owners must share the policy limits. If the limit is reached before you file a claim, then you’re out of luck. When you’re renting out property through Short-Term or Vacation Rental sites, you need your own insurance plan that’s designed to cover all your bases from liability to property damage. Unfortunately, free coverage rarely offers the same level of protection that a policy like Proper does.
Short-Term Rental Laws – Insurance Requirements
The primary reason for an insurance requirement is to ensure that short-term rental owners are properly protected from injuries or property damage.
Commercial general liability is found in business insurance policies and protects the insured against claims of bodily injury or property damage they could be found legally liable. It is the most comprehensive liability insurance one can purchase for short-term rentals.
Additionally, when defining the “proof” of insurance, cities or counties can easily require a “certificate of insurance” which is a standardized form to show proof of insurance to various interested parties, including banks, mortgage lenders, or in this case, cities or counties requiring owners to provide proof of insurance to obtain a short-term rental certificate.
Quote Your Short-Term Rental Today
Looking to fulfill the Chelan County insurance requirement today with a policy that’ll protect you and your business from liability and damage claims? Proper Insurance leads the Nation in short-term rental insurance, with over 50,000 policies written in all 50 states. Backed by Lloyd’s of London and exclusive endorsements from short-term rental leaders such as HomeAway and Vrbo, Proper Insurance is built on world-class insurance coverage that meets and exceeds both city and lender requirements.