VACATION RENTAL INSURANCE FOR OWNERS
A vacation rental insurance policy for property owners from Proper offers comprehensive coverage designed to entirely replace your current homeowners or landlord insurance policy.
With the exclusive endorsement of Vrbo® and the support of Lloyd’s of London, it’s no surprise Proper is the nation’s leader in vacation rental insurance for owners.
With 100,000+ policies written in all 50 states, Proper’s coverage is unmatched in the vacation rental industry.
Understanding Vacation Rental Insurance for Owners?
Comprehensive vacation rental insurance for owners must include protection for both personal and commercial use of the property. These properties are often used personally by the owner or family, and then regularly rented as a short-term vacation rental on Airbnb or Vrbo as well. There may even be times when the property is unoccupied. Add up the multi-use of the property and you have big gaps in traditional insurance coverage.
The Proper vacation rental insurance policy is essentially three policies in one. It has components of a homeowners policy, coverage found in a landlord policy, and the foundation of a commercial business policy. Because of our trademarked vacation rental insurance endorsements, we can claim the title as the most comprehensive vacation rental insurance for property owners on the market.
Vacation Rental Home Insurance
The foundation of a great vacation rental home insurance policy is the coverage form. As with any type of home insurance policy, you have three options, which are basic, broad, and special aka ‘all-risk’ or exclusions based.
Proper provides a special form ‘all-risk’ coverage on all its vacation rental home insurance policies. This enhanced exclusions-based form states that every peril is covered unless it’s specifically excluded. Then you add in our unique vacation rental home insurance endorsements for damage caused by a guest, liquor liability, and more, and you have the most complete insurance product a vacation rental homeowner can purchase.
Vacation Rental Home Insurance Enhancements
Homeowners, landlord, and even commercial insurance policies were never intended to cover the scope of a vacation rental property. The key to a comprehensive vacation rental home insurance policy is in its enhancements better known as endorsements.
An insurance policy endorsement is when a carrier re-writes a section of the insurance contract, typically to provide a unique or niche coverage. With vacation rental homes, you either need to re-write the entire contract, or start with a commercial policy as Proper did, and then create specific endorsements tailored to the exact exposure.
A great example is damage caused by a guest. Virtually all vacation rental home insurance policies on the market have a limitation or exclusion for property entrustment; meaning when you entrust your property to someone, there is no coverage for damage caused by that person. Proper’s unique enhancement or endorsement re-writes this section to state, that there is no limit on damage caused by a guest. You are only subject to the building(s) and contents limit in your policy.
Vacation Rental Property Insurance
As the owner of a vacation rental, your first thought regarding protection should be vacation rental property insurance. This is the asset itself, what you can touch and feel, such as the building or structure and the stuff inside of it, such as furniture, linens, decor, and so on.
Good vacation rental property insurance will not only cover perils such as fire, broken water pipes, wind, and hail but also offer protection for backups of sewers and drains, theft, ordinance or law and so much more. With insurance, the devil is in the details and you must have an agent you trust, one who can answer the tough questions. You want to know exactly what vacation rental property insurance you have purchased.
A component of vacation rental property insurance that often gets overlooked is loss of rental income or revenue. Depending on what type of insurance policy you have, you may either carry, a loss of rent, loss of income, or loss of revenue; which is unique only to Proper.
When you have a covered insurance loss at your vacation rental property such as water damage from a broken water pipe, you will often need time for repairs which will result in canceled Airbnb or Vrbo bookings. This loss of rental revenue falls under property coverage, so speak with your Proper agent as we recommend 24 months’ worth of protection in your vacation rental insurance policy.
Vacation Rental Property Insurance Enhancements
As we continue to look at insurance enhancements, vacation rental property insurance is no different. You’ve worked very hard to turn your vacation rental business into an income-producing asset, so great protection should be at the top of your mind. This often comes down to vacation rental insurance enhancements.
Earlier, we discussed loss of rents, versus what Proper offers, which is loss of revenue. Let’s deep dive into how this little detail could make all the difference when a vacation rental property insurance claim is filed, such as a total loss fire.
No vacation rental homeowner wants to imagine their vacation rental catching fire and burning to the ground; but the unfortunate reality is it happens more than think, especially if you are in a forest fire area, which is virtually anywhere there are trees! And then there is the occasional guest-caused fire, electrical fire, and unknown fire as well.
It can take 24 months or two years to fully rebuild the vacation rental property, and your typical loss of rent policy only pays for 12 months and pays what’s called ‘fair market value’, which is the average of all rentals in the area.
Proper pays what’s called ‘actual loss sustained’, which is your actual loss, and we have no time limit, so you are only subject to the loss of revenue you choose to put on your policy. Our vacation rental property insurance is far superior to our competitors.
Vacation Rental Insurance Policy
A vacation rental insurance policy is comprised of three distinct sections; which are property coverage, liability coverage, and loss of income coverage. What type of coverage forms, enhancements, and endorsements you have makes all the difference in the quality of your vacation rental insurance policy.
The property coverage section of your vacation rental insurance policy is going to protect your building(s) and contents sometimes called personal property, from perils such as fire, wind, hail, water damage, vandalism, lightning, and more. It’s important to note that earthquake and flood are separate policies and not included in a vacation rental insurance policy.
The liability insurance found in your vacation rental insurance policy is arguably the most important section to know and understand as liability is your single biggest exposure, should a gust get injured at your vacation rental. Proper is unique in that we offer $1,000,000 of commercial liability insurance on all our vacation rental insurance policies and encourage clients to upgrade to our $2,000,000 option.
Some might argue that lost income is often overlooked and equally as important as liability because, without the vacation rental income, there is no vacation rental business. When an insurance loss happens, the bills and mortgage must still be paid, so you must have appropriate business income or revenue limits of protection built into your vacation rental insurance policy.
Vacation Rental Insurance Policy Enhancements
A few unique vacation rental insurance policy enhancements Proper offers are bed bug and fleas, and squatters coverage. Both of these coverages were first-to-market and the result of Proper listening to the needs of the vacation rental industry.
After years of selling the best vacation rental insurance policy, one of our insureds asked about bed bugs and said that would be a coverage she would be willing to pay for. We worked with Lloyd’s of London to create the coverage form and what we ended up with was a $15,000 limit, that included the cost of extermination and the lost revenue from canceled bookings.
Then, we added fleas as well to the coverage enhancement as we have lots of policyholders that have pet-friendly properties, and fleas were something that should be included, within the same $15,000 limit.
During the Covid-19 pandemic, many short-term rentals or vacation rentals transitioned into mid-term rentals and squatting became a concern. To be the broadest vacation rental insurance policy, you need to think outside the box and deliver new coverages. We came up with squatters, put a $15,000 limit on it, and included protection for legal fees to remove the squatter and the lost revenue as a result.
Vacation Rental Damage Insurance
The proper policy is the most comprehensive vacation rental damage insurance product as it carries no sub-limit on damage caused by a guest.
When you hand over the keys to your property to a guest, you are entrusting that property to them, and most of the time, there is no damage, but if you are in eh vacation rental business long enough, at some point you will need bullet proof vacation rental damage insurance.
Another aspect of vacation rental damage insurance is the security deposit, or entirely replacing it with a damage protection product. Since Proper and all home insurance contracts carry a deductible, you do need to fill that deductible gap about damage caused by a guest.
Our sister company, Waivo, just just this and has a damage protection product that will pay from first dollar, and end at your Proper insurance deductible.
Vacation Rental Damage Insurance Enhancements
When we think of complete vacation rental damage insurance, we think of guest damage and theft. This could be as simple as a guest breaking a chair, to as serious as an out-of-control party leaving six figures of damage.
To sleep well at night as a vacation rental owner, you need to first have a policy that would respond to guest-caused damage and then also have one that has no submit as well. This means that the only limitation on guest-caused damage is the limit you choose as a policyholder for building(s) and contents.
The same logic applies to theft. Most policies do not cover theft from a guest, but Proper believes that theft is a big exposure and should be included in a vacation rental damage insurance product. Proper not only covers theft but has no sub-limit on theft as well.
Vacation Rental Insurance FAQs
What kind of insurance do I need for Vrbo?
As a vacation rental by owner, you need a comprehensive home insurance policy that covers both personal and commercial use of the property. You need building(s), contents, business revenue, and commercial liability coverage.
Do I need vacation rental insurance for Airbnb?
Yes, as an Airbnb host, you are competing against Hilton and Marriot for travel lodging dollars and are subject to the same business hospitality laws they are. Comprehensive vacation rental home insurance is a must-have.
Why do insurance companies not like Airbnb?
Properties that are rented on Airbnb carry a greater risk of both property damage and liability claims.