In the insurance world, a property that is rented for less than 30 days at a time is typically considered short-term. A property in which the renter does not reside/live at the dwelling. Short-term rentals can be found on websites like HomeAway, VRBO, Airbnb, TripAdvisor, Vacasa, and many more. Many home insurance carriers have denied coverage if short-term renting was not disclosed by the insured, see Emily Richer Vs Travelers Insurance – July 2017
Who is Proper Insurance?
Proper Insurance Services, LLC is a licensed insurance agency incorporated in the state of Virginia. An insurance agency is an office that is licensed to sell insurance products.
Does Proper Insurance pay claims?
Insurance is a three party transaction. There is the insured (you), the insurance agency (salesman/Proper), and the insurance company (underwriter). The insurance company pays the claims. The Proper policy is underwritten by Lloyd’s of London which is AM Best’s rated A. Lloyd’s has an excellent reputation for claims paid and is considered premier in the industry. They are the founding company of insurance over 325 years ago.
Why does my homeowner's policy not cover my short-term rental?
All homeowner’s policies carry a “business activity exclusion”. In other words, any claim involving a “business activity” could rightfully be denied.
Is my short-term rental really a business?
Yes. More and more cities like Austin, Santa Barbara, New Orleans, Nashville, and Chicago are now requiring short-term rental owners to carry a business license and carry $1,000,000 in commercial liability. They are also putting in requirements for occupancy tax collection, like a hotel. None of these are requirements for a long-term lease rental.
I have a landlord policy and have been told this covers my short-term rental, is this correct?
Landlord policies also carry a “business activity” exclusion. Landlord policies are written for landlords, not business owners. A long-term lease rental is not a business. Let’s use a liability example: A renter leases your home for six months. Two months later he/she “slips and falls” in the shower because there is soap scum built up on the tub floor. Does this liability fall on the landlord? No, of course not, it’s the tenant’s responsibility to keep a clean tub. Now, the same situation. A vacationer rents a home for a week. You better believe it’s the property owner’s responsibility to keep a clean tub. The vacationer assumed they were renting a clean/safe property. No different than a hotel. The liability falls on the property/business owner.
How do I get covered for business activity?
You buy a business insurance policy. The Proper Insurance policy is a business policy. It covers your business property (rental home/contents), business liability, and the business income it generates.
If I insure my short-term rental as a business, can I also stay there?
Yes. There are no standard occupancy restrictions on a business policy. This means the property is insured while you stay there, friends or family, and of course paying guests.
My short-term rental is also my primary residence, can I still purchase the Proper Policy?
Yes. If the short-term rental home is also your primary residence, Proper simply adds $1,000,000 in personal liability and $50,000 in loss of use to relocate in the event the property is being rebuilt. This is very important if you do not carry a homeowner’s policy elsewhere.
What if I also live at the short-term rental, can I still purchase the Proper policy?
Yes. You have the same business exposure. We see every scenario imaginable. You live upstairs and short-term rent the downstairs. You live in the main home and rent out the guest house, etc.
If I have the Proper policy do I keep my homeowner's or landlord policy in place?
No. The Proper policy is designed to fully replace the current coverage you have. You would cancel your current policy.
Does the Proper policy cover vacation rental condos and homes?
Yes. The Proper policy covers single family homes, condos, duplexes, town homes, and more. It does not require to be defined as a vacation rental/short-term rental etc.
What is personal liability?
Personal liability is found on homeowner’s policies. It covers you for personal negligence and follows you anywhere you go in the world. It’s very important to carry personal liability. This is why Proper adds it to our policy in the event your short-term rental doubles as your primary residence. There is no reason to add it in the event you carry a homeowner’s on another residence, as you would be “double insured”.
Does my personal umbrella cover over my short-term rental?
No. The same “business activity” exclusions apply as it’s personal. However, standard personal umbrellas do cover over a long-term landlord property. It’s not a business.
What is a commercial umbrella?
A commercial umbrella is a policy that covers “above and beyond” a standard business policies liability limits. Since the Proper policy is a business policy and carries $1,000,000/$2,000,000 in commercial general liability, it does suffice as the underlying policy for a commercial umbrella. Proper sells commercial umbrellas. Contact your Proper representative to get pricing and information.
I have my short-term rental under a Corp is this OK?
Yes. In fact, Proper encourages this. Since your short-term rental is a business it’s always smart to incorporate. We can write your policy with the named insured as an individual, partnership, LLC, Corp, or Trust.
Why don't all the major insurance carriers offer a policy for short-term rental properties?
In order for an insurance company to be profitable it must collect more premium than it pays out in claims. Most insurance companies see short-term rental properties as “high risk”. Lots of foot traffic and unknown variables. They simply don’t want to take on the risk. With the help of Proper, Lloyd’s of London understands the risk and is willing to insure it. Note: Lloyd’s of London has been underwriting for over 325 years.
Do you have more questions?
As stated in our footer, Proper believes in education first. We want to answer any and all the questions you have. Please , or call 888-631-6680. We look forward to working with you!
Get A Quote From Proper Insurance® Today
If you are not currently insured with Proper, we strongly encourage you to review our insurance coverage, because we offer the best. Take 5 minutes and look into our short-term rental insurance program underwritten by Lloyd’s of London. It’s comprehensive insurance for both the property and liability of a vacation rental.