Vacation Rental Insurance: Which Policies Protect Homeowners?
vacation rental insurance

Vacation Rental Insurance: Which Policies Protect Homeowners?

When homeowners decide to start out in the vacation rental business, one of their biggest concerns is whether they will ever have any unpleasant surprises. These unforeseen events can arise from many different situations and can cost a fortune. However, in legal terms, if your business isn’t well protected, little can be done to resolve these problems once they’ve occurred. So how can you avoid this? Protect yourself beforehand, meaning choose the best insurance. 

You have to find the vacation home insurance that’s right for your business. Not all cover what you think when it comes to protecting your rental. Although your home insurance can have multiple policies or liability insurance, it may not cover renting out to guests as a business. There could also be incidents in which neither you nor your guests would be covered, for example, if someone broke into your property during their stay and took their belongings.

What Does Insurance Cover?

Every owner needs to analyze what they want to protect and which insurance best suits them. Due to the increase in vacation rentals, many insurance companies and policies aim to protect homeowners.

1. Liability Insurance

What does liability insurance cover? Accidents that can occur whilst guests are staying in your property, but it will not cover damage to the property. Some homeowners think that accidents are unlikely, for example, how likely is it that the roof will fall through? But you can never know what can happen. Earlier this year a couple died in a vacation rental in San Diego when a tree fell on the property they were staying at.

vacation rental insurance

In any case, if you want you and your business to be protected, it’s a good idea to take out liability insurance. In the event that a guest has an accident or is injured in your property and decides to sue, all the legal costs and proceedings will be covered.

2. Insurance on Airbnb and HomeAway

Advertising your holiday rentals on platforms such as Airbnb or Homeaway offer the possibility of taking out insurance that protects the owner and has further benefits. For starters, these listing sites offer an option where you can get a deposit from the guests, acting as a guarantee in case they damage your property. You can choose the amount you would like for the deposit in advance, making guests more careful with your property for fear of losing this amount.

In addition to allocating a security deposit, Airbnb, the leading company in holiday rental advertising, provides its hosts with the possibility of taking out host protection insurance with a coverage value of up to $1,000,000 for personal injury or property damage.

vacation home insurance

HomeAway also provide $1,000,000 liability insurance for homeowners and property managers listing through their site. Even if you already have your own liability insurance, if someone makes a claim against you, HomeAway provide additional coverage. 

Although these policies have pros, they do have some drawbacks. For starters, the host protection insurance provided by Airbnb only covers damage caused by travelers, but it won’t insure you in the event of a claim, whoever is at fault. It will also not cover damage that is not caused by guests, for example, if there is a flood in your house (which is nobody’s fault) and it leaks to your downstairs neighbor, forget about being covered; you’ll have to pay whatever it takes out of your own pocket.

3. Travel insurance

If something goes wrong that prevents your guest from taking their trip, such as sickness, injury, jury duty, bad weather, natural disasters, job requirements, or they have to cancel last minute for whatever reason, travel insurance ensures that the guests’ money is returned and the host can keep their rental payment. This way, you’ll be able to protect the guest relationship, meaning guests will have more confidence in your business and will feel more assured in booking your rental in the future after they had to cancel.

4. Insurance with Exclusive Policies for Vacation Rentals

It’s always better to prevent something from happening than to fix it when the damage has already been done. That’s why homeowners prefer to have insurance that covers all the situations in which they could lose money by having to make repairs to the house or simply having to replace things. Remember that your current home insurance may not automatically cover your property for renting out to guests. 

Experts recommend taking out multi-risk insurance to cover fire, flood and third-party claims, as well as coverage for guest theft, electrical damage or any weather-related situation. Employee liability insurance is also recommended if gardeners, cleaners or maintenance personnel have been hired. And, of course, you should insure your house when it’s empty because during this period it’s vulnerable. This also includes when you are undergoing any renovation work in your property.

vacation rental insurance for renters

How can you find insurance that’s right for you? Insurance differentiates from state to state, the type of property, the number of properties and what exactly you want to be covered. It’s important to do all the research and know what exactly you are looking for you and your business. Remember that insurance also differs in every country. 

Specific vacation rental insurance already exists, that is neither home insurance nor insurance for a standard business. They offer insurance purely to protect your vacation rental. They also include some services, such as guest screening services, or payment protection. They could offer you some specific policies depending on the budget you want to spend on this side of your business, as they are flexible around each type. Many insurance companies already offer insurance for vacation rentals, so don’t hesitate to ask your current insurance company.

It’s always better to be covered by insurance, even if you think something is unlikely to happen, you should always protect yourself, your home and your guests. Although we won’t like to think so, things can always go wrong in life.

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