Last week we dove into the details of ‘sewer back-up’ claims and had such a great response we decided to take a look at another of our most popular claims from 2019 – and given that the Super Bowl is this weekend, this one couldn’t be more appropriate.
Many of you are already booked for televisions biggest weekend, and while major events can be an easy opportunity to fill your rental, you may want to proceed with caution as these aren’t your typical guests.
Whether a local youth group or some old college buddies, many guests are renting a place to kick back, invite their friends, and watch from the comfort of your home, on your new flat-screen.
While this means income, it also means wear and tear: lost remotes, broken lamps, and popcorn in every crevice of your sofa.
These types of damages are minor and come with the territory of short-term rentals. Many of you have accepted that it’s simply a cost of doing business and move on. But things can get out of hand quickly, and when they do, you’ll want to have your playbook ready.
Here are a few pro-plays to consider before kick-off:
Pro-Play #1: Know the Away Team
For televised events like the Super Bowl, you don’t often see groups booking from out of town, so a simple way to identify if your home is set for a disastrous weekend is to do a little research on your guests.
Pay attention to where they are coming from. If they are from the same town where they are booking, it’s likely they’re booking a gathering, regardless of whether you indicated “no parties” in your listing.
Since the Super Bowl is so widely followed, you can pretty well bet that groups booking for this Sunday are going to be enjoying the game. You can ask that they remove their shoes, limit the number of guests, or don’t eat/drink in certain rooms, but ultimately you just have to trust that they’ll respect your home.
Pro Play #2: Hope for the Best, Train for the Worst
A coach can only do so much to prepare his team for the big day. He’s trained them well and trusts they’ll perform on game day, but does that mean he doesn’t plan for the worst?
Not a chance.
What if there is an injury or weather rolls in? There are simply too many things that can go wrong and so the best teams have extensive plans for when disaster strikes.
As a short-term rental host, you need to have such plans in place as well and one of the key components is your insurance policy.
So, given that the Super Bowl means parties and parties can lead to damages and theft, what kind of coverage do you need to ensure you’ll have protection?
The answer brings us to another one of our top short-term rentals claims of 2019:
Intentional or Expected Acts of Theft and Vandalism
Now we can all agree that if the neighbor kid spray paints your siding, or breaks in to steal your flatscreen, this would certainly fall under theft and vandalism. But what if your guests throw a party and something is damaged or goes missing? Is this the same thing?
Assuming the cost of replacement exceeds your deductible, you would be calling your agent to file a claim, but it’s important to note that this claim is NOT the same as theft or vandalism by way of break-in of your home.
In fact, this claim falls under a completely different section and you must know how your policy defines coverage.
So, what should you look for?
Sneaky Exclusions: “Property Entrusted to Others”
The difference between break-in and guests who already have entry is defined by a key exclusion in nearly all homeowners’ policies. This exclusion is called “Property Entrusted to Others” and in a nutshell, states that ‘theft’ or ‘vandalism’ coverage is excluded IF the property is entrusted to someone else (i.e: you give them the keys).
The easiest way to understand this is to think about why an insurance company would remove this coverage.
Imagine letting a relative use your home while you’re away for the weekend. They have a few friends over but it gets out of hand and before they know it there’s a full-blown house party at your home.
With scratches on the hardwood, beer on the carpet, and art and electronics missing, you’re out $20,000 because of their poor choices.
So you call your agent to report the claim, after all, you have coverage for theft and damages, right?
Not so fast, you knowingly gave your relative the keys to your home, thus entrusting the property to them.
Your insurance carrier’s response? – “Take it up with your relative, they owe you $20,000”
The same goes for short-term rentals, and the fact that you are entrusting the property to guests in pursuit of profit only makes it less likely that your insurance company will assist you.
This isn’t a back-up play, it’s a forfeit.
What you want to see is this specific exclusion removed from your policy entirely. With a policy like we offer at Proper Insurance, this is the case, but this is only because we custom-pen our policy for short-term rental businesses.
You’ll want to run this by your agent in advance so you know what to expect.
Separate Coverage Limits (a.k.a Malicious Mischief Exclusion)
The second item to look for is a separate limit for theft or vandalism by guests (i.e: the dreaded Malicious Mischief exclusion).
While intentional acts of theft and vandalism rarely carry separate deductibles, we often see them carry a separate limit which details the max your insurance company will pay for theft or damage by guests.
This is an important limitation to address with your agent as these exclusions are seen most often in policies that claim to be written for short-term rentals.
Remember, insurance always comes back to risk, so insurance companies who understand that a short-term rental home is more likely to have items stolen or vandalized by guests are going to do one of three things:
- Exclude the coverage altogether
- Charge more premium for the added coverage
- Charge a little more, but greatly limit the coverage and therefore their risk
In this case, number 3 is the route many supplemental and less comprehensive short-term rental policies choose to take and many of these policies limit coverage for theft and damage by guests to as little as $2,500!
At Proper Insurance, we take the way of number 2. We have to charge more premium for the additional risk, BUT we offer full coverage up to the policy limit that you specify for the structure or contents.
So if you have coverage for $50,000 worth of stuff, and a guest, whom you’ve entrusted the property to, pulls up in a U-haul and cleans you out, you would have replacement cost coverage up to your limit of $50,000.
It’s just that simple.
Pro Play #3: Listen to the Crowd
These days there are plenty of tech options to keep people from breaking into your home, but what about once they’re inside? Can you still monitor your home once your guests have checked in?
Well, it turns out the team at NoiseAware has come up with a simple solution that plugs right into your wall. The outlet sized device monitors the volume level in your home and uses WiFi to alert you when it sounds like your guests may be having a bit too much fun. This can help prevent noise complaints from your neighbors, parties from getting out of hand, and ultimately theft and damage claims.
The device doesn’t eavesdrop on the specifics of your guests’ conversations, but simply monitors the overall noise in the home. Think of it as listening to the screaming fans in the crowd from the field. You can’t make out what they’re saying, but you can tell when they’re excited!
At Proper, we’ve found that clients who have the NoiseAware system installed see far fewer claims as a result, and because of this, we’re able to offer a premium credit to clients who have this device.
Overtime Tip: Verify Your Insurance
It can be tough to know what your policy covers without going through each possible scenario. For this particular claim, a good place to start is with your current insurance agent. Send them the following question and see what they have to say, just make sure they’re getting the answer in writing from the underwriter of your policy.
“If I entrust my property/home to a paying Airbnb/VRBO short-term rental guest for 3 days, and that guest throws a party and vandalizes, damages or steals my property, do I have property coverage to the limits of insurance?”
We’re happy to provide a coverage comparison as well, so if you have questions about your current policy, give us a call at 888-631-6680 or submit a 5-minute online quote request today!