Four Things to Know About Your Short-Term Rental Insurance

Emma Bartz

ebartz@orrinsurance.net

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Summer is fast approaching and short-term rentals have taken the vacation world by storm. I am a stay-cation kind of person and being in a family’s house or cottage instead of a hotel is the best of getting away and still feeling at home!

The benefits to renters and owners are abundant – in addition to making good use of your investment by earning extra income, short-term rentals make owning multiple properties more affordable.

Property insurance that provides coverage at the best of times can be a bit confusing, and rental properties are no exception.

The insurance world has adapted to provide coverage to property owners who wish to use all or a portion of their house this way, but there are some important things to keep in mind when you’re insuring your short-term rental property or a seasonal property:

1. YOUR INSURANCE COMPANY NEEDS TO KNOW – this is number one for a reason. If your insurance company is not aware of how you are using your property, and there is a claim resulting from that use, you risk having no coverage.

I would recommend contacting your insurance broker before committing to using your property as a rental so you go into the situation fully aware of the costs of short-term rental coverage and the replacement cost if any loss or damage is caused.

2. YOUR STUFF – It is likely that you will have content coverage on a short-term rental policy, but it’s important to ask how much coverage you have, and if it is for the used or new value of the items. You should also consider removing all valuables and irreplaceables during the time the home is being rented to avoid any potential damage caused.

3. YOUR LIABILITY – I always recommend a minimum of $2,000,000 liability coverage but not all policies design liability coverage the same way and it is important to clarify how much coverage you would have for each claim, especially if your space can host different individuals at once, or you plan to rent it out on multiple occasions each year.

You should also remove keys to any automobiles, recreational vehicles, or watercraft and lock up any portions of the home or outbuildings that are not meant to be part of the rental. Clearly indicate to your renters what they are and are not permitted to use during their stay before renting out your property. This can safeguard your space from any criminal acts and other kinds of intentional acts from renters that might cause you trouble.

4. HOW MUCH ARE YOU EARNING – property owners can insure the income so that, if you are in a claims situation and are unable to rent out the space for a time, you can recover that lost income. This coverage may have to be added on request and I consider it to be very important.

Every insurance policy,  whether it be long-term rentals or short-term rentals, has restrictions. You should know if you are covered, for how much, and if there are any exclusions you need to be aware of, and that is where a Broker comes in.