Owning a second home or rental property can present homeowners with a wide range of opportunities. The opportunity to share your property with others as a rental does not come without some risk. Being prepared for potential problems is the key to owning a successful vacation rental. Your insurance agent can help you navigate the ins and outs of insuring your property for rentals.
When you live in the home you own, your homeowners insurance protects your home in certain circumstances. Most often, insurance covers losses that result from natural disasters such as fire. Events that damage your property, such as theft, are also covered. In addition, single guests that visit are generally covered by your standard insurance policies. In the case of “home-sharing,” or renting your home to others for a short period, your typical homeowners insurance will not be enough.
Frequent quests in your rental property mean your property is at an increased risk. Because there are more people using your home, the risk of a liability claim on your insurance also increases. For this reason you would need a policy that offers more liability protection than a basic home insurance policy.
Another point to consider is that you are renting your property in order to generate money. This is actually considered a business activity and therefore requires insurance outside of your homeowners policy. By working with your insurance provider, you can review the various policies they offer to find the one that best fits your situation. In some cases, insurance companies offer coverage in the form of endorsements. Other instances may require a separate policy, sometimes in the form of business or commercial insurance. Some companies have created policies designed specifically for rental and home-sharing. These policies will usually include property and liability coverage.
If you work with a service to share your home or property, it is important that you understand the “Host Guarantee” offered by the company. This guarantee is not an insurance policy. It offers protection to hosts from damage caused by guests. Some rental management services do offer “Host Protection Insurance.” Their policy will protect homeowners from liability claims of bodily injury and property damage. It is important to note that this coverage is only valid in third party claims related to their stay on the property. In addition, this type of coverage may not cover property damage that results from a disaster such as a violent storm. To ensure you have the coverage you need, you should talk with your insurance carrier and know how all policies work together.
In special circumstances, your building or community may carry a blanket insurance policy. These policies generally only cover liability on the grounds surrounding your property. If there is a problem inside your rental property, it would be your responsibility to have appropriate coverage. It is obvious that there is not a common solution for your vacation rental property insurance needs. Before you begin renting your property, schedule a meeting with your insurance provider. Be honest about your plans for the property and what service you are using to list your rental. Your insurance provider will need to know how often you plan to rent, if you are renting a portion of the property or the entire property, and if the property will be vacant between rentals.
Once you have shared your plans with your insurance company, you will need to discuss how your current policy works when you share, or rent, your home. If there are gaps in your coverage, you will need to know how they can help you cover the gaps. You might be able to add an endorsement, or you may need to purchase a separate business or commercial policy. You should keep in mind that vacation property rental insurance can be more expensive than typical homeowners insurance. Factors that affect pricing include your deductible, replacement cost for the home, location, and the amount of coverage.
Herring Insurance is ready to answer your questions about vacation rental property insurance. Knowing the details of your policy and its limitations can help you fill the gaps and protect your property. You can move forward and share your property with confidence and peace of mind.