Two Different Kinds of Vacation Rental Insurance?
If you are a property owner considering converting your property into a vacation rental, or if you are planning a vacation and renting a property, it’s important to know about the two different types of insurance for vacation rentals available for you.
Vacation rental insurance for renters
When planning a trip, you plan ahead. You book a hotel or short-term rental, a vehicle if needed, and your airfare if you need to fly to your destination. But you probably haven’t considered purchasing insurance for your trip. If you are planning a trip and using a short-term rental from VRBO, Homeaway or AirBnb during your vacation, you may want to consider purchasing vacation rental insurance. This will cover you in case your short-term rental property is uninhabitable due to unforeseen circumstances. Most comprehensive plans include coverage for short-term rentals. Make sure the policy you choose provides such coverage.
Purchasing traveler’s insurance can also protect you from issues such as lost baggage, trip cancellation and medical expenses incurred on your trip. It also can provide access to assistance in case of emergency.
Traveling to a different country? Some countries require you to purchase traveler’s insurance. In this case, you will need to find an insurance provider that offers international coverage.
Hopefully you will never need to make an insurance claim on your vacation, but it’s best to be prepared.
Vacation rental insurance for owners
You may think your homeowner’s policy is sufficient coverage. However, almost all homeowner’s policies have what is known as a “business activity exclusion” clause, which will free the homeowner’s insurance company from liability should an unfortunate event or damage occur in your rental property.
Consider your rental property as your business. As a business owner, you would purchase insurance to cover your business property, liability and income. As such, it only makes sense that you would need to make the same arrangements for your rental property. Vacation rental insurance replaces your homeowner’s insurance to give you the coverage you need for your personal property and your short-term rental.
How do you choose which insurance policy is right for you? Be sure to select a company that specializes in vacation rental insurance in order to receive the level of coverage you need.
Commercial vs. personal liability
Personal liability provides coverage if an accident on your property results in bodily injury or property damage for which you are legally responsible. This is not to be confused with commercial liability insurance, which protects you as a business owner, rather than a homeowner. If you are renting your property as a vacation rental to short-term guests and receiving income from your property, then you need commercial liability insurance.
Commercial liability insurance typically covers medical costs up to a certain amount if a person is injured on your property where you are deemed to be at fault. The policy may also cover legal costs in the event you are sued as a result of the incident.
Property damage to others caused by your short term renters is also typically covered by commercial liability insurance, including damages from fire and other weather events. Your own liability coverage will not cover your own property as you would need property coverage for this.
Vacation rental insurance for Property Managers or re-renters
If you’re the Property Manager or re-renter on a rental property (as opposed to the property owner), you may still want coverage in case of legal recourse against you. Your options are similar – general liability insurance can protect you against medical claims. Some insurance companies will list the property manager as an additional insured on the owner’s policy, which is more common on a long-term rental. The owner must request this from their insurance provider, and not all providers offer this option. A Property Manager may also carry what is known as “Error and Omission Insurance” (E&O Insurance) which protects the owner from any error or negligence made by the Property Manager, but also provides the Property Manager with liability coverage.
List of short-term vacation rental insurance for renter options
If you’re renting a spot for your vacation and want to know more about vacation rental insurance options for renters, here are a few places to get you started:
Offers a Gold Plan with 24/7 assistance services and trip cancellation/interruption coverage. – Travel Guard
Offers a variety of coverage options for travelers, including a “Cancel for Any Reason” option. – Rental Guardian
Aggregator of vacation rental insurance plans. Obtains quotes from many providers to find the best coverage for you. – InsureMyTrip
The last word on short term rental insurance
If you’re uncertain about what policy will work for you, or how much coverage you need, it’s always a good idea to consult a qualified vacation rental insurance agent or an attorney who specializes in rental real estate.