Vacation rental insurance for owners needs to cover the building(s), contents, rental income, and commercial liability. The building and contents insurance should be special form all-risk insurance with replacement cost valuation. The rental income insurance needs to be “actual loss sustained” with no time limit. The commercial liability insurance should be for the vacation rental and include coverage for amenities such as: hot tubs, swimming pools, exercise equipment, rec area, small water craft, bicycles, and more.
Other things that your insurance should cover include sexual assault, violence, common areas, and more. Unfortunately, most insurers neglect to provide coverage for these areas. It’s important to understand that if a guest were to be assaulted on your property, you could be held liable. By having a comprehensive insurance policy in place, you can help avoid the extreme costs involved in a liability claim or lawsuit.
Vacation Rental Insurance for Owners is More Affordable than Most Think
The key is to have an insurance policy that can replace your current policy, but also add the income and liability protection needed for a business. For this a vacation rental owner needs a specialty insurance product. The only way to accomplish this is to start with a commercial business policy and then enhance and endorse it to meet the needs of the home. Because renting a vacation home on a short-term basis is considered a business activity, this is the only way for it to be comprehensive. There are insurance carriers who can provide this coverage for an average of 30% more than a standard homeowner’s policy. Because the coverage replaces the current coverage and is not supplemental, it’s only an added total cost of 30%.
Is Your Vacation Rental’s Business Income Insured?
If your property is damaged by a guest or if it requires repairs, then you likely can’t rent it out on VRBO, Airbnb, or even on your own until repairs are completed. For some property owners, this can add up to a lot of lost revenue. For example, if your property is normally booked at $150 per night and repairs leave your home uninhabitable for a month, that’s $4,500 in lost business revenue. Without a commercial vacation rental insurance plan, you’ll be left writing it up as a loss.