For all those landlords who are part of Airbnb, Vrbo, among other platforms, it is essential that they hire a short-term rental insurance to avoid headaches due to damages and accidents of the temporary tenant.

With technological advances, taking advantage of our assets, such as cars and properties, became easier, but also exposed them more to property damage. In the case of homes, many private homes now generate income through short-term rentals, thanks to applications such as Airbnb or Vrbo. This makes it all the more necessary to protect assets by means of special insurance to cover this aspect.

What is short-term rental insurance?

Short-term rental insurance is a special financial product that protects your property from damages and liability exposure you might have by having guests renting your home.

For example, if a paying guest is injured and sues you, the liability coverage of your short-term rental insurance will help protect you financially. Short-term rental insurance is designed for short-term use cases and not for year-round rentals to the same tenants. For the latter, you will need homeowner’s insurance.

This insurance should also not be confused with the classic homeowner’s insurance, which usually protects you from damages and civil liability in case an inhabitant or visitor, relative or acquaintance, is injured inside your property. The big difference lies in the way the insurances take into account the injured person: while one of them pays for a short stay (short-term rental), the other one does not have a business relationship with the owner (visit).

Many insurance companies offer short-term rental insurance as an endorsement or rider, meaning that the coverage is added to your current homeowner’s insurance policy. Depending on how the rider is written, it may only pay for the nights you have guests at your property, not the ongoing coverage. This may help reduce your costs if you only plan to offer your property for rent on a part-time basis.

Other companies may require you to obtain a separate policy to cover your short-term rental. Whether you are renting a room in your home or another home on your personal property, this coverage can protect your assets in the event of an accident.

Common short-term rental coverages include:

  • Loss of income.
  • Excessive use of utilities.
  • Infestation
  • Liquor liability
  • Identity theft

How do I get short-term renters insurance?

To obtain short-term renters insurance, you can check with your current homeowners insurer to see if they offer a policy or endorsement/rider. If you can’t get coverage from your current provider, explore other homeowners insurance companies to compare prices and coverage.

National and regional property insurers that offer short-term rental insurance include:

Allstate: Allstate’s HostAdvantage shared housing insurance.
Farmers: aimed at landlords, Farmers’ policy offers tenant screening reports through SmartMove, where the cost of the service can be passed on to tenants.
Foremost: you can customize your Foremost short-term rental policy with options such as a landlord package, endorsements and your preferred settlement method for approved claims.
Nationwide: For occasional short-term rentals, Nationwide offers an endorsement or rider to your existing homeowners or condo policy.
Progressive: If you lose rental income due to a covered loss, Progressive’s homeowner’s policy has you covered.
Proper: Exclusively backed by Vrbo, Proper offers a 4-in-1 policy that covers short-term rentals, personal use, occasionally unoccupied dwellings, and long-term guests or tenants.

How much does short-term rental insurance cost?

As with homeowners insurance, the costs of short-term rental insurance vary depending on the characteristics of the property and the policy purchased.

Among the factors that may determine which policy is cheaper than another are:

  • The condition of the property
  • The construction materials
  • The location of the property
  • Crime rates in the area
  • Proximity to fire stations
  • Your credit score

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