The vacation rental industry, also known as the short-term rental industry, is growing each year. Homeowners rent their homes as a way to make money and travelers stay in those homes as a way to experience a new city outside of the confines of its tourist center (and its tourist-center hotel rooms).
But how can homeowners keep themselves safe from property damage by guests? And how can guests ensure that they have the proper insurance coverage while staying in a vacation rental?
Vacation rental insurance for owners
If you’re planning on renting out all or part of your home, whether its your primary residence or not, it’s important to make sure that you’re covered. There are several types of coverage for vacation rental owners to consider, and there are several types of policies that may work, either standalone or combined, to ensure you get the right amount of coverage.
Whether you choose one policy or a combination of policies, there are four kinds of coverage that you should have when you’re renting out your home as a vacation rental:
Liability coverage to protect you if one of your guests (or anyone else) gets hurt at your property. This coverage would pay for your legal defense if they sue you, plus provide some money for their medical bills.
Contents coverage to protect you if your furniture and other belongings are damaged or stolen.
Structural coverage to protect you if your home is damaged or destroyed.
Lost income coverage to reimburse you if damage to your property results in you being unable to rent out your home.
Types of insurance policies for vacation home owners
Homeowners insurance policy. Many homeowners policies provide coverage for you to rent your owner-occupied home out “occasionally” with advance notice given to your insurance company. If you’re only planning to rent your home out once or twice — say, as a home swap or during a big event in your city — if you let your insurance company know beforehand, you may be covered. Policygenius can help you find a homeowners insurance policy that works for you.
Homeowners insurance policy plus rental rider. Some homeowners insurance companies will add a rider to your policy that adds coverage for you to rent your home out. Ask your insurance company if they offer a rider for home renting.
Homeowners insurance policy plus landlord insurance policy. Some vacation home owners keep two insurance policies: homeowners insurance, to cover the property when they are there, and a separate landlord insurance policy to cover them when guests are there.
Vacation rental insurance. A few companies offer something called a vacation rental insurance policy, a new product that is designed to replace your current homeowners or landlord policy. This type of policy offers coverage both when your home is occupied by you and when it is occupied by a paying guest.
Pay-per-use homeshare insurance. Another type of vacation rental insurance is something called pay-per-use homeshare insurance, which is designed for homeowners to fill the coverage gap that exists when they have someone renting out their home. Homeowners keep their regular homeowners insurance policy, and pay a per-night fee when they have paying guests.
Vacation rental service provider-provided coverage. Some vacation rental service providers including Airbnb and HomeAway offer either free or fee-based coverage to homeowners renting their properties out through them. This coverage is generally secondary coverage, meaning you need to make a claim through your primary policy first. If you’re renting your home through a service, ask about what coverage options they provide.
Vacation rental insurance for travelers
If you’re a traveler staying in a vacation rental during some or part of your trip, you may wonder what kind of insurance you need in case you accidentally damage the house you’re staying in. The good news is that the liability coverage from your own renters insurance policy or homeowners insurance policy will cover you even outside the home, so you’re still covered.
If you’re worried about deposits and cancellation fees when you book a vacation rental, travel insurance, also known as trip insurance, can protect you. Some credit cards may also offer trip cancelation coverage if you pay for your booking on your card; check with your credit card company about coverage.