Reviewed and updated on 03/05/2020
Amidst the unprecedented growth of the short-term rental market for Airbnb & Vrbo properties, even the brightest spot on earth has implemented regulations. A continual theme among short-term rental ordinances is liability insurance. Las Vegas has one such ordinance requiring a minimum of $500,000 in liability insurance for Airbnb and Vrbo properties. Here is the Las Vegas Short-Term Rental Ordinance.
License Application Requirement, 3.H. ~ Provide proof of liability insurance coverage in a minimum amount of $500,000.
The irony in this requirement is it does not define what “type” of liability, and does not define what “proof” means. It’s a good idea to have an insurance requirement for Airbnb & Vrbo property owners as they are essentially running a hotel out of a single-family or multi-family property, and they need to realize they are now subject to a higher level of care, but let’s actually help them, not confuse them.
Every short-term rental owner needs to understand they are running a business, as every insurance policy, HOA, and bank will agree. When the MGM Grands hotel occupancy goes down 3% because families are coming to Las Vegas and staying in a short-term rental accommodation, instead of the MGM, you better believe you are operating in a business world!
With liability insurance there are essentially three types one can purchase for a dwelling; personal liability, premise liability, and commercial general liability. The MGM carries commercial general liability, not personal or premise liability as found in a homeowner’s or landlord insurance policy. Commercial general liability specifically covers business aspects, such as slip and falls, pools, hot tubs, amenities, and more importantly, the coverage extends off premise. Coverage does vary between insurance carriers so don’t assume you are covered by reading this article, as a carrier may exclude animal/pet liability, liquor liability, and more, so check your policy.
Edit #1 to short-term rental ordinance is to define liability as “commercial general liability”.
Now let’s look at “proof” of insurance. I highly doubt you could walk into a real estate closing and provide an email from your insurance agents that stated, “you’re covered”, and the bank would lend you the $300,000 for your house, NO. There are standardized insurance forms for this, and proof of insurance is provided on what’s called a “certificate of insurance (COI)”. Every insurance company, every mortgage broker, and most other professional industries know and expect this.
Edit #2 is to define “proof” as require a certificate of insurance, COI, showing proof of coverage.
It’s great the city of Las Vegas is taking this relatively new concept of home sharing, Airbnb and Vrbo, seriously; but let’s not mislead property owners here with a 1/2 attempt. Let’s call it what it is, a business, and let’s require business insurance. The corrected language in the short-term rental ordinance would read as such:
Edited: Commercial general liability insurance in the minimum amount of $500,000 and proof of such provided via a certificate of insurance, COI.
For more information on Airbnb & Vrbo regulation in Las Vegas, Nevada, feel free to visit their website: Las Vegas Short-Term Rental Regulations.
Give Proper Insurance a call today to discuss how insurance fits with regulatiosn – (888) 631-6680!