Why You Need Vacation Rental Insurance and How to Choose One

Vacation rental insurance is a proven way to protect your property from unexpected events and adversities.

Despite this fact, many homeowners still wonder if they need vacation rental insurance for their business. While vacation rental sites do not require you to have insurance, it’s better to err on the side of caution. Vacation rental insurance will help prevent dreadful complications and financial losses. It will help you stay on the safe side by protecting your business.

Find out why short-term rental insurance is a smart investment and explore the top insurance providers on the market. 

Do I Need Vacation Rental Property Insurance?

If you are looking for a short answer to this question, it’s a definite yes. Though Airbnb, Vrbo, and websites alike provide basic protection, there are a number of situations where it doesn’t help much. For example, Airbnb Host Guarantee doesn’t cover theft of cash and securities. 

There is also no coverage in the event of intentional property damage. While platform policies offer protection from minor issues, they are insufficient when it comes to more serious cases. Simply put, basic policies on platforms cannot replace comprehensive coverage.

On top of that, keep in mind that standard homeowner’s insurance is not enough for running a full-fledged business. Once you start earning money with your short-term vacation rentals, it becomes a business endeavor from a legal perspective.

Even if you rent your property occasionally, filing a claim in case of property damage might be problematic. To get such issues sorted out, the best idea is to opt for insurance specifically designed for vacation rental owners. 

Vacation rental insurance vs. second-home insurance

It’s easy to confuse these two terms, but they have a completely different meaning. A second home is a residence that you use in addition to your primary residence without any intention to generate income. A second home is not usually rented out and is used as personal property for non-commercial purposes. In this case, your insurance coverage will be similar to standard homeowner’s insurance. 

Renting out your second home for more than 14 days in a year will be considered a business activity. Second homeowners opt for this strategy to save on expenses arising from homeownership and its maintenance. At this point, your second home turns into a vacation rental.

Renting your property to strangers means more risk. You have more liabilities related to your guests and the likelihood of accidents increases. In this case, purchasing vacation rental home insurance would be a smart move. 

When you start renting out your property, the standard homeowner’s insurance becomes insufficient. It won’t provide any coverage should anything any emergencies occur at your property during your guests’ stay. So, it’s imperative to get comprehensive vacation rental home insurance to sleep well at night.    

Top 11 Vacation Rental Insurance Providers

To make your search for the best insurance easier, we’ve compiled a list of top vacation rental insurance companies. 

1. CBIZ

CBIZ is one of the most popular vacation rental insurance providers for owners. 

CBIZ covers all renters’ stays no matter how those stays are booked (directly or via Airbnb and other OTAs). This insurance covers various types of properties like single-family homes, condos, duplexes, etc. The coverage includes:

• Replacement costs for a property owner’s building, its contents, and additional structures
• Damage caused by a guest
• Backup of sewer and drains

Additionally, the insurance program from CBIZ can provide coverage for medical expenses and litigation costs. 

2. Allstate

AllState is a widely-known insurance carrier that allows customers to buy insurance policies in bundles. For hosts, it offers a special program called HostAdvantage Home-Sharing Insurance. It serves as an addition to homeowner’s insurance and provides coverage in the following cases: 

• Theft (the insurance program helps protect your belongings while your guests are staying at your home)
• Damage (HostAdvantage can provide coverage of up to $10,000.00 for each rental period).

3. Farmers Insurance

Farmers Insurance is also one of the biggest and most reputable insurance providers in the USA. The company offers two types of vacation rental insurance for owners. One of the options is customizable and the other one is prepackaged. 

 Farmers’ prepackaged policy offers the following options:

• Liability insurance
• Comprehensive property coverage
• Partial and total loss coverage

Customers who buy multiple policies from Farmers Insurance get discounts from the company. 

4. Nationwide

Nationwide is a large company that provides personal and business coverage in all 50 US states. Nationwide offers short-term rental property insurance which is called a Business Liability Policy. 

It can replace your existing homeowners’ insurance if you rent out your property on a regular basis. If you rent your house out occasionally, you can buy an “endorsement” to your existing policy. 

By opting for multiple policies from Nationwide, you’ll be eligible for a discount from the company. 

5. Proper Insurance

Proper Insurance is backed by Lloyd’s of London and exclusive endorsements from the top OTAs such as HomeAway & Vrbo. The Property Insurance policy covers both commercial and personal use of your vacation rental.

Its solution represents a homeowner’s policy, a landlord policy, and a business policy all wrapped into one. It provides coverage for vacation homes, townhouses, condos, duplexes, cabins, cottages, apartments, and more.

More good news is that you can get a tailor-made policy specific to your vacation rental home. The Proper Insurance agents will help you to acquire the most comprehensive insurance for your property.

6. Safelystay

Safelystay has developed vacation rental home insurance and a special guest screening service. With Safely you, as a property manager, can get up to $1,000,000 in structure and liability protection. Also, you get up to $10,000 of insurance on the contents of your home and guest’s belongings.

The Safelystay algorithm helps estimate the risk of every reservation. Thanks to its extensive database, Safelystay helps hosts run guest checks before they make a reservation.

7. RentalGuardian

RentalGuardian provides vacation rental insurance for renters as well as property owners. 

RentalGuardian offers coverage for both owners with a few units, as well as for large multinational holiday resorts. Here is a brief overview of the products that RentalGuardian has on offer: 

• Travel protection — this type of insurance is geared toward short-term rental guests. It covers costs that may arise from unexpected events that can happen before or during your guests’ stay at your property. 
• Accidental Damage Protection — protects against unintentional damage to your rental during your guests’ stay. 
• Liability Coverage — protects owners and their properties from liabilities created by guests.
• Corporate Damage Protection — this insurance protects corporate housing and extended-stay properties from accidental damage.

8. Superhog

Superhog provides protection both to hosts and guests. The company’s mission is to “make short-term rentals 100% safe for everyone, removing any risks of the unknown.”

Superhog’s screening system helps verify properties, hosts, and guests. Superhog claims to protect each booking by a free damage deposit and its £1M guarantee. 

9. InsuraGuest

InsuraGuest is a digital insurance provider and an insurtech (insurance + technology) company. Its software platform delivers insurance to b2b clients but it’s also currently expanding its services to b2c markets. 

InsuraGuest focuses on providing flexible insurance packages that are tailored to meet the hosts’ needs. It covers situations that are not included in traditional insurance packages. These are incidents that may occur without direct fault like accidental property damage or injury.

10. Guardhog

Guardhog has created a platform that allows listings from Airbnb, Booking.com, Vrbo, and other sites to connect to Guardhog’s software. Guardhog synchronizes all your listings and provides coverage automatically once you get a reservation. 

You can also add manual stays to your calendar to get them insured. This way, hosts pay for vacation rental insurance only when they have guests. 

Guardhog offers a different range of vacation rental insurance products for owners. Among them are: 

• Hostcover. This is an extensive cover that works as an endorsement to your existing homeowner’s insurance. It’s effective every time you have guests staying at your rental.
• Homecover. Insurance that covers your property, its contents, personal possessions, and also public liability costs.
• Guestcover. This type of insurance protects guests when they book your property.
• Rescuecover. Protects you from home emergencies that need to be solved immediately when guests are staying at your property.

11. VRMA Member Insurance Program 

VRMA Member Insurance Program is available only to the members of the VRMA association. VRMA Member Insurance Program focuses on the main needs of the customer and provides coverage at a reasonable cost. VRMA insurance agents will analyze your current insurance policy and its gaps. Afterward, they will suggest the best insurance programs based on your unique requirements.

How Much Does Vacation Rental Insurance Cost?

On average, you’ll need to pay two to three times higher rates for your vacation rental insurance than for your homeowner’s one. Across the USA, the cost of vacation rental insurance for owners varies between $2,000 and $3,000 per year. It will be much higher if you rent a property in popular tourist destinations such as California and Florida. In this case, be ready to spend up to $9,000 annually for full coverage.

The cost of your vacation rental insurance will depend on the following factors:

1. 1. Property location. If your rental’s location attracts lots of travelers, the cost of your insurance will be higher. 
   2. Deductible. The higher your deductible premiums, the lower your monthly cost will be.
   3. Rental frequency. The more often you use your property as a short-term rental, the more expensive your insurance will be.
   4. Amenities. Amenities such as a swimming pool, hot tub or fireplace bump up the insurance cost due to the higher potential risks.
   5. Replacement costs. The more expensive your property is to repair, the more expensive insurance it will require. 

What Does Vacation Rental Insurance for Owners Cover?

Before opting for a particular insurance plan, do thorough research on what it covers. The perfect insurance plan should include the following four aspects: 

Liability coverage — Your insurance plan should provide coverage in case your guests are injured while staying at your property. No matter how safe your holiday home is, accidents might happen. The liability for guests’ safety is the biggest risk of each host and property manager. The insurance plan that you select should minimize or eliminate this risk. 

Property and its contents coverage —  Incidents like fire, damage, or theft usually happen out of the blue. This is why it’s crucial to have insurance that covers replacement or repair costs when anything unexpected takes place.

Rental income — Unforeseen events may lead to a potential income loss. To avoid dealing with substantial losses, you should make sure that your insurance plan protects your rental income. Though it may not cover 100% of your income, at least partial coverage will help keep your business up and running. 

Additional coverage — If your property is located in an area where natural disasters such as floods, earthquakes, or tornadoes occur quite often, you may want to get extra coverage. Again, it’s better to be on the safe side, rather than face unpleasant consequences.  

Conclusion

Vacation rental insurance is an essential asset to your business.

Getting insurance will provide you peace of mind and will make your business less susceptible to unexpected events.   

To bring even more stability to your business, consider using vacation rental software. A software solution such as iGMS will help automate your business and streamline your operations. With iGMS, you’ll be able to: 

• Manage all your  listings on Airbnb, Booking.com, Vrbo/HomeAway, etc., using our channel manager
• Automate your guest communication and the process of leaving reviews
• Streamline cleaning and team management tasks
• Stay on top of your business results with our reporting module.

By making iGMS your best companion, you can be sure that your business will go from strength to strength.