Expert Insights for Renting & Safeguarding Your Extra Properties

You’ve worked hard for your financial success, and securing additional homes can be immensely rewarding. When your family isn’t enjoying one of your properties, renting it out can turn it into an entirely different investment.

Whether you're using it as a true vacation home or opening it up to others, your new dwelling comes with a circus of unique situations. From escaping harsh winters as a snowbird to hosting summer weekenders, it’s crucial to ensure you’ve got the right coverage to enjoy your investment.

Understanding Insurance for Rental Properties

If you rent out your second home for part of the year, homeowners and second home insurance likely won’t cover any damages. Rentals are considered a business activity, so once money changes hands, these policies typically exclude business-related claims.

Connect with a member of our vacation rental team for more information on insuring your short-term rental.

Your rental intent and cadence of stay also will influence insurance needs. Properties rented out frequently for short periods may be considered a business and, thus, require a business policy. If you intend to rent out the property seasonally, consider a landlord insurance policy or long-term rental insurance. This coverage will offer protection for the dwelling, additional structures on the property (e.g., garage) and any personal property that is utilized to service the rental (e.g., lawnmower).

Short-term Rentals vs. Long-term Rentals

When investing, find a property with the greatest return on investment (ROI). Short-term rentals have become increasingly popular over the past few years while long-term rentals provide more stability. Though these types of rental properties have commonalities, they’re also extremely different. As a result, insuring can be challenging.

Short-term Rental Property

This property is leased for periods of less than six-month increments, accommodating multiple renters throughout the year. Commonly known as vacation rentals or executive housing, this style of rental has surged in popularity thanks to platforms like Airbnb, VRBO and HomeAway. Some vacation rental owners list their properties on these sites when they’re not in personal use while others use these homes exclusively for commercial purposes.

Property owners can also leverage the growing trend of a sharing economy where individuals share assets, resources or services (e.g., Turo, Airbnb, GetMyBoat) directly with others. These consumers prioritize access over ownership, seeking unique, personalized experiences. The conveniences and access to amenities, such as kitchens and private living rooms, can be profitable for owners.

Owners of short-term rentals can also be eligible to deduct property expenses and tax breaks because of the duration of the stays.

Long-term Rental Property

Owners may opt for this type of leasing that extends for longer periods, typically six months or longer. Long-term rentals offer tenants a more permanent living or working arrangement. Some benefits of this type of rental include:

• Regular rental income
• Reduced tenant turnover
• Lower costs for renter search and property preparation

Long-term property rentals offer stability and predictability for landlords and tenants, making them a favored option for those looking for a more permanent housing or business solution.

Peace of Mind Protection for Your Home Away From Home

If you’re relying only on your homeowners insurance, landlord insurance or a host liability policy to provide coverage, you could be exposing yourself to serious risks. There are various factors to consider to guarantee your property is properly insured. Be sure to talk to an agent or broker before buying insurance so they can explain everything in detail and help you find the best policy for your needs.

Connect with a CBIZ Vacation Rental Insurance team member today and request a free quote.

This blog may contain scenarios that are provided as examples only. Coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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