Do you own an amazing vacation house on Lake Tahoe, or a desert oasis home in Palm Springs? What about a sprawling vacation ranch in Texas, or a beautiful snow laden retreat in Utah? If you own any type of vacation home, keep reading.
Now, are you renting this vacation home for less than thirty days at a time (at any time), which is billed at a rental rate based on nights stayed?
If you fall into both of these categories, then this is the perfect guide for you. We will be discussing all of the ins-and-outs of short term vacation rental insurance policies for homeowners using Airbnb, VRBO, Homeaway, or any other vacation home rental service.
Making sure you are covered is extremely important because your original homeowner's insurance policy does NOT cover this activity, more than likely. Not only that, but you will want to make sure that you cover your exposure in the event of something catastrophic happening.
In this guide, we will cover the following questions and topics about short-term vacation rental home insurance. Feel free to click the topic/question below to be taken directly to that section:
- What is Short-Term Vacation Rental Insurance?
- Does my existing homeowner's insurance policy cover my home whil using services like Airbnb, VRBO, and Homeaway?
- What should I be looking for in a short-term vacation rental policy?
- Will a short-term rental policy cover both commercial and personal use of my vacation rental?
- What exposure do I have as a vacation rental owner?
- What options are available for short term vacation rental policies?
- What is the best short-term vacation rental policy? And why?
- What are some alternative short-term rental policy options?
- What are some of the short-term vacation rental policy highlights to be aware of?
- How much does a short-term rental vacation insurance policy cost?
Now, let's get right into it and provide you with the ultimate guide to short term vacation rental insurance policies for Airbnb and VRBO homeowners.
What is Short-Term Vacation Home Rental Insurance?
Short-term vacation rental home insurance commonly refers to a residence that is rented for less than thirty (30) days at a time and is billed at a rental rate based on nights stayed.
At the end of the day, short-term rental vacation insurance is a specialty coverage or "endorsement" and it can be amended to your homeowner's policy to cover your asset when renting your home to others using services like Airbnb, VRBO, Homeaway, and any other vacation rental home service.
The policy is not mandatory, but being reckless is not mandatory either. Protecting your valuable asset from exposure when renting through these other avenues is extremely important and it is even more important to use the best short-term rental vacation home policy on the market.
Interesting Read: Why are Home Insurance Rates Going Up?
Existing Homeowner's Insurance Policy Coverage for Short-Term Vacation Rentals
In regards to the question of, does my homeowner's insurance policy cover short-term vacation rentals, the answer is most likely NO in every given situation. Most insurance carriers use a standard policy form from the Insurance Services Office, or ISO. The standard form includes several exclusions that could present coverage issues for a homeowner without the correct coverage.
Of most importance is the “Business” exclusion within the Liability portion of the homeowner's insurance policy. It is critical that this section is reviewed, and you are not giving the insurance company a reason to deny a liability claim at the home when it is being rented out to others.
What to Look for in a Short-Term Rental Vacation Policy
At Old Harbor Insurance Services, we recommend that you make sure that you are purchasing an insurance policy from a reputable insurance company. Make sure that the company is highly rated, reviewed, and stands by its products when needed the most.
Once you’ve checked that box, it is important to ask questions such as:
- Does the policy have a vacancy clause?
- Does the insurance company require a minimum night stay?
- Are there any pet restrictions?
Each one of these questions will help you to understand the overall coverage of the policy. Some policies are great, and others leave many gaps in coverage. Be sure that you are protecting your most valuable asset with one of the best short-term rental vacation home policies on the market.
Will a short-term rental policy cover both commercial and personal use of my vacation rental?
Insurance for a short-term rental home is commonly written on a “personal lines” insurance policy. However, there are some exceptions. A number of homeowners that host events and parties – such as weddings, showers, or “craft ins” - at their properties, will have most of those risks written on a commercial property insurance policy.
Weddings and other events typically have exposures that cannot be properly insured under a homeowners insurance policy. For example, there is no way for a typical home insurance policy to address host liquor liability – the correct way to address the risk is through a commercial insurance policy. We’d recommend you have an open conversation with your agent about your intent with your property.
Exposure for Vacation Rental Owners
As the owner of a short-term rental home, your exposure is very broad, and a claim could arise from many different areas.
It’s important to take every precaution to prevent a claim from happening.
Here are a couple pointers:
- INSPECTIONS - Have the property routinely inspected by a licensed inspector and have the recommended repairs completed by a licensed, bonded, and insured contractor.
- POOLS & SPAS - Make sure pools and spas are fenced and gated.
- ANIMALS - Do NOT allow animals whenever possible. Animals create an element of unknown risk for any homeowner – even the best dog could bite under the right set of circumstances. Allowing your renters to bring a dog introduces an added liability risk to you; it’s a risk that you are capable of eliminating and we recommend doing so.
Taking these steps ensures that you are doing everything possible to cover any exposure that you may have when renting out your short-term vacation rental home. Things like gap protection will help you when it comes to recovering your belongings and recovering for losses of personal property (this also includes belongings that might be damaged).
Other liabilities might include a guest jumping off the roof of the house, into the pool, and not making the jump. If the person requires medical attention/treatment for injuries, then a good short-term rental insurance policy with liability coverage will take care of whatever the homeowner may be responsible for as a result. You can never be too safe.
Short Term Vacation Rental Insurance Policy Options
With the rise of companies like Airbnb, VRBO, and Homeaway over the last decade, only a few policies appropriately address the exposures present at a vacation rental home. It is important to make sure that you are working with the industry leaders in this space to ensure proper coverage for your vacation rental insurance.
Listed below are a few of the insurance policies that are available to you as a vacation rental homeowner:
- Berkshire Hathaway Guard Short-Term Rental Vacation Home Insurance
- Proper Insurance
It is important that you review each one of these vacation rental insurance policies with an independent insurance broker to make sure that you receive the best policy with the best coverage for your important home asset.
The Best Short Term Vacation Rental Home Policy
At Old Harbor Insurance Services, we pride ourselves on providing our clients with the best insurance options and carriers on the market.
For this reason, we have identified Berkshire Hathaway Guard's Short-Term Vacation Rental Policy as the best policy on the market, and we use Berkshire Hathaway as a Preferred Partner.
Here are a few reasons out of a LONG list of them on why Berkshire Hathaway offers the best short-term vacation rental policy:
- REPUTATION - Most importantly is the reputation that Berkshire Hathaway carries. An insurance policy is only as good as the paper it’s written on, and if you ask any reputable insurance professional, they’ll concede that Berkshire Hathaway Guard is the most highly regarded and ethical company in the insurance industry.
- TAILORED COVERAGE - Berkshire Hathaway tailors coverage to meet any need a client may have or one that arises. Berkshire Hathaway allows for the ability to offer a simple, stripped down policy that addresses the essentials on a more standard risk, or the policy can be dressed up with all the bells and whistles that are needed to properly insure a high end short-term rental vacation home in an areas like Newport Beach, Santa Monica, Palm Desert, or San Diego.
- PRICING & CONSISTENCY - Extreme confidence lies in the premiums being charged and the underwriting behind the Berkshire Hathaway policies. Many companies will offer cheap policies with little coverage to try to gain market share only to realize they can’t make money. Inevitably, they close, leaving their clients stranded. When Berkshire Hathaway places a policy, the plan is to insure the short-term vacation rental property for life.
In the following paragraphs we will highlight the Berkshire Hathaway short-term rental policy in more detail, but the choice is clear when deciding on a short-term vacation rental policy to protect your asset.
First things first, Berkshire Hathaway is an Admitted, American-based insurance carrier.
Berkshire Hathaway Guard is a complete insurance operation with billing, underwriting, and claims adjusters all employed by the company. A setup like this allows for consistency and is extremely important in the event of a claim. Company adjusters have the flexibility to address a claim and write checks on the spot.
Berkshire Hathaway operates through local, privately owned insurance agencies. Their model promotes doing business the “old fashioned” way and encourages meeting with clients face-to-face.
Unfortunately, the Berkshire Hathaway short-term rental insurance policy is not available in every state. Contact us to see if the policy is available for your home.
Alternative Short-Term Rental Policy Options
In addition to Berkshire Hathaway Guard, we are proud to offer the only other complete, insurance policy for a short-term vacation rental property through Proper Insurance and Lloyd's of London. This short-term vacation rental policy is backed by an insurance carrier that’s been around since the 17th century, Lloyds of London. Not only has Lloyds of London been around longer than the United States, they stand behind the policies issued and offer another incredible solution for short-term rental vacation home insurance.
There are many circumstances that will warrant placing a policy with Proper Insurance and Lloyds of London. For example, there are states where Berkshire Hathaway isn’t offering home insurance yet. The Proper Insurance policy is available in all fifty (50) states.
Also consider whether or not you need enhancements for liquor liability. Liquor liability enhancements are not available with Berkshire, but can be included with the Lloyds of London policy. Liquor liability enhancements might be needed if you plan on incorporating weddings or events at your home location.
Additionally, with the Proper Insurance/Lloyds of London policy liability protection can run up to $2,000,000 per occurrence, which is greater liability protection than that of Berkshire Hathaway.
With either of these policy options, we are able to insure a home owned by a Corporation, homes owned by LLCs, and homes owned in a trust. No matter how the title is held on your short-term vacation rental home, either the Proper Insurance or Berkshire Hathaway policy has you covered!
Be Aware of These Short-Term Vacation Rental Policy Highlights
When shopping for a short-term vacation rental home insurance policy, it is important to consider many factors when determining which policy to go with. Also, having an independent insurance broker help assist you with the process can be a HUGE advantage as well.
Interesting Read: The Benefits of an Independent Insurance Agent
Referencing the Berkshire Hathaway Guard’s short-term vacation rental policy again, the chief highlight of the policy is the flexibility offered to the homeowner. Again, every possible exposure at a short-term rental property can be appropriately addressed by the policy. Things like the following will be considered:
- Do you have a golf cart (or snow mobile!) at the property?
- Do you want coverage for the utilities connecting from your home to the main line in the street?
- Do you want coverage for wrongful eviction, wrongful entry, violation of privacy, slander, or defamation?
- And so much more...
Here are some other important policy notes to be made aware of and questions to ask of your short-term vacation rental insurance policy writer:
- Policy Ratings - What type of ratings does the short-term rental vacation home insurance policy carry? Is the policy A+ Superior rated by AM Best (rating notes) or AA Stable rated by Standard and Poor?
- Consistent Premiums - Most companies are subject to reinsurance market underwriting. Be sure you are working with a financial stalwart that does not need reinsurance because of their cash pile.
- Fair Practices - Ensure that there will be no bait and switch tactics that are so pervasive within the insurance industry.
- Ability to Cover High Fire Risk Areas - Many insurance companies are leaving California because of high-risk wildfire areas. In regards to Berkshire Hathaway’s underwriting, with Ajit Jain at its head, is the best in the world. Berkshire Hathaway has confidently released their home insurance product in California, Texas, and a handful of additional states. Check out this map of California Fire Hazard Zones by clicking here.
- Flexible Dog Breed Acceptance - Most carriers have extensive lists of dogs breeds they won’t accept. It’s so common we wrote an article highlighting dog breeds to watch for in terms of insurance coverage.
- Service Line Coverage - Service line coverage has emerged as one of the “must have” enhancements to a home insurance policy. The service line coverage endorsement provides coverage for damage to utility lines connecting to your home such as electrical power, heating, waste disposal, and water.
- No Home Size Restrictions - Due to reinsurance contract limitations, most home insurers cannot insure properties with replacement costs over $1.5 Million. There’s no shortage of these homes throughout the West. Click here for a short-term rental vacation home insurance policy without home size restrictions.
- Airbnb, VRBO, and Homeaway Acceptance - We’re blown away at how the home sharing community has blossomed over the last decade. Be sure that your short-term rental insurance policy offers a comprehensive short-term rental insurance solution that allows that community to be appropriately protected and continue to thrive.
Short Term Vacation Rental Insurance Policy Costs
There is no way to give a specific price point for short-term vacation rental policy costs. A lot of factors go into determining the cost of the policy.
Some of those factors include:
- Policy Activity - Whether the policy is active 24/7/365 or just on nights when the rental is booked.
- Specialty Coverage - Additional specialty coverage needed (service line, fire danger areas, onsite vehicles, etc.)
- Policy Provider - in our experience, the Berkshire Hathaway rental insurance policy normally comes in at a better rate than many other standard short-term rental insurance policies.
No matter the cost, a short-term vacation rental home insurance policy is something you need to have for your home.
Thanks so much for reading the Ultimate Guide to Short Term Vacation Rental Insurance Policies for Airbnb and VRBO Homeowners.
If you'd like more information about short-term vacation rental policies, please do not hesitate to reach out to our talented team.
We'd like to offer you a FREE rental home insurance consultation. We can be reached at (951) 297-9740 or you can use our contact form by clicking here.