Why You Need Vacation Rental Insurance

Becoming a short-term vacation rental owner can be a great way to earn extra money. However, property owners sometimes do not consider the potential risks that can come with owning a vacation rental business.

When you list your property online on sites like Airbnb and money changes hands, you’re engaging in a business activity and the stakes go up. Property owners face risks associated with property damage, liability, and lost income that homeowners’ policies, general platform policies or landlord policies typically don’t address.

Know the difference between other types of insurance.

Homeowners insurance is designed to help cover the costs when there is damage to your primary residence. These policies provide coverage for owner-occupied properties. If something happens to your home (or someone in your home) when it is being rented out, your homeowner’s policy will most likely not cover it.

Commercial vacation rental insurance is specifically designed for short-term rental usage and protects against liability for renters’ physical injuries and claims related to advertising. For example, let's say a guest is injured while staying at your vacation rental. They file a lawsuit to recover their medical costs, claiming a loose handrail on your property caused their injuries. A commercial insurance policy would cover the cost of defending your claim and any damages or settlement payments (up to the policy’s limits).

Vacation rental property insurance also offers rental income protection in the event property damage requires you to stop renting the unit temporarily. When loss of income protection is triggered by a covered event, the insurance company pays the cost of repairing your property and the rental income you lose while your property undergoes repairs.

Platform policies aren’t always enough.

Some owners may wonder why additional insurance coverage is needed. With most short-term rental platforms offering a host protection guarantee, you may be wondering why that’s not enough to cover your business.

Many of the general policies will not cover:

• Issues with the property such as mold or pollution.
• Slander, false accusations, or bad reviews resulting in a loss of business.

A commercial vacation rental policy will cover these and much more. Platform policies are wonderful to have for small issues, but it is not a great substitute for vacation rental insurance.

If you rent out a vacation home, you need vacation rental insurance.

Vacation rental insurance is a safety measure you pay for and hope you’ll never have to use but are thankful for having it. It’s always best to prepare for the worst, especially when renting out a short-term vacation home. Spend your time researching which policy best fits your needs. Commercial vacation rental insurance can cover property damage, liability claims, lost income and more.

Don’t ignore the genuine risks you have as a business owner when engaging in short-term rental activity. To learn more about protecting your vacation rental business through CBIZ Vacation Rental Insurance, request a free quote today!

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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