Why Are Some Vacation Rental Properties Tough to Insure?

Although it’s always important to purchase adequate insurance to protect your investment property, some rental properties are harder to insure than others. These properties, sometimes called “hard-to-place homes,” are usually exposed to a variety of risks, and insurance providers are more hesitant to provide coverage for them.

Discover why vacation rental properties often face insurance challenges, and get proactive steps to increase your chances of securing adequate coverage:

Weather, Location & Natural Disasters

Short-term rental properties in areas of the country more prone to disasters like wildfires, earthquakes and hurricanes can be difficult or more expensive to insure. Secondary coverage is a great option if your property is in an earthquake-risk area, flood zone or wildfire-prone area. Take steps to install weather-resistant additions to your home, such as a reinforced roof and shutters.

Higher deductibles can be incurred simply because of just the location. Often, more desirable locations, such as the beach or the mountains, are at greater risk of damage.

Curious about what to expect from the short-term rental insurance market in the second half of 2024? Download your free copy of The 2024 Short-term Rental Market Insurance Outlook today!

Vacant More Often Than Not

If your rental property doesn’t get much use throughout the year, you may not be aware if it suffers damage, such as a break-in or broken water pipe. Take adequate security measures, such as installing a security system, that will alert you if any damage occurs. Smart technology makes it easier to always have “eyes” on the property.

Risky Amenities

If your property has exercise equipment, a pool, hot tub or trampoline, or if it’s located near natural hazards, such as a steep drop or body of water with a dock, you could be held liable for harm caused to anyone on your property. Install fencing to guard against natural hazards and prevent strangers from trespassing on your property. It’s crucial to have a list of rules posted around your property and easily accessible to guests. Whether placed in the welcome book or an actual sign near the hazard, make certain the appropriate signage is clear and legible. 

Property Age

When it comes to insuring your vacation rental property, age and condition matter. For example, older homes may have outdated electrical or plumbing systems. Additionally, architectural features that add to its aesthetics could be costly to replace. Insurers will closely evaluate factors like these when determining your premiums.

In certain situations, insurance companies may increase the premiums of policyholders to compensate for the potential costs of claims. Furthermore, they may even refuse to provide insurance if the property is not properly maintained or updated. Be sure to keep your insurance agent aware of any improvements you make to your home to make it easier to assess. For owners of older homes, opting for a higher deductible is a simple way to lower the insurance premium. By choosing a deductible of $5,000 or more, policyholders reduce the amount the insurance company will have to pay in the event of a claim. Consequently, the higher the deductible, the lower the premium that needs to be paid.

CBIZ Vacation Rental Insurance

If you’re relying only on your homeowner's 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 ensure your property is properly insured. It's important 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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