Renting out your property for short-term stays can be a great way to generate extra income. However, as a property owner, it’s important to be aware of the unique risks involved with hosting guests, and more importantly, what your insurance policy will and won’t cover in different scenarios. Short-term rental insurance can offer much-needed protection, but it's essential to understand the fine print so you're not left with unexpected costs.
In this post, we’ll walk you through some common short-term rental scenarios, explaining what will and won’t be covered by your insurance, and how you can ensure your property is fully protected.
One of the most common concerns for short-term rental hosts is property damage caused by guests. Whether it’s a broken window, a stained carpet, or a cracked appliance, accidents can happen. While homeowners insurance typically covers damage to your home, it might not extend to damage caused by paying guests.
What’s Covered?Short-term rental insurance usually includes coverage for accidental damage caused by your guests, such as:
What’s Not Covered?
In some cases, damage caused by negligence or deliberate actions may not be covered under short-term rental insurance. For example, if a guest intentionally damages your property, your insurer may deny the claim.
Another significant risk when renting your home to strangers is guest injury. A slip-and-fall accident in the kitchen or a burn from a stovetop can result in medical bills, potential lawsuits, and increased liability. Homeowners insurance typically does not cover injuries that happen when your property is used for commercial purposes, like short-term rentals.
What’s Covered?Short-term rental insurance typically includes liability coverage for guest injuries, meaning it can help pay for medical costs and legal fees if a guest is injured on your property. This coverage can also protect you if a guest sues you for their injury.
What’s Not Covered?If the guest’s injury is caused by their own reckless behavior or if they are engaging in illegal activities, it may not be covered by your insurance. Additionally, if your home is in a dangerous condition that you were aware of (e.g., an unstable staircase that you didn’t repair), it could be excluded from coverage.
Theft and vandalism are unfortunate possibilities when hosting guests, whether it’s an item being stolen or intentional damage to your home. Homeowners insurance often covers theft and vandalism in your home, but the specifics can change if the property is being used for short-term rentals.
What’s Covered?Short-term rental insurance typically covers theft or vandalism by guests, as long as it’s reported promptly and within the terms of your policy. If a guest steals your belongings or damages your property intentionally, your insurance may help cover the loss.
What’s Not Covered?If the theft is committed by someone other than a guest, such as a non-registered person who enters your home, homeowners insurance might be the primary coverage. However, if your guest is not a paying renter or is staying at the property illegally, coverage might be excluded.
While your guests’ actions are a risk, natural disasters like floods, fires, and earthquakes can be unpredictable and damaging. Homeowners insurance typically covers some types of natural disasters, but it may exclude certain events, like flooding or earthquakes, unless you have additional coverage.
What’s Covered?Most home insurance policies cover natural disasters such as fires, windstorms, and hail damage. Short-term rental insurance may extend this coverage while you’re renting out your property.
What’s Not Covered?Flood and earthquake damage are often excluded from homeowners and short-term rental insurance policies. If you live in an area prone to these events, it’s important to purchase additional coverage like flood insurance or earthquake insurance to ensure your property is fully protected.
When damage occurs to your rental property, whether from a natural disaster, fire, or guest-related incident, your property may be rendered uninhabitable for a period of time. This can result in a significant loss of income from bookings that you’ve already scheduled.
What’s Covered?Short-term rental insurance often includes loss-of-income coverage. This helps replace the income you lose if your property is temporarily unusable due to covered damage. For instance, if a fire damages your home and you can’t rent it out until repairs are made, your insurance may cover the lost revenue.
What’s Not Covered?If the damage is not covered under your policy or caused by something outside of your insurance’s scope, loss-of-income protection may not apply. For example, if you voluntarily choose to cancel a booking or if the property is damaged due to neglect or poor maintenance, you might not be covered.
What happens if a guest causes damage or is injured but does not have insurance of their own? Without insurance coverage, the responsibility often falls to you as the host, and it can be costly.
What’s Covered?Short-term rental insurance generally includes liability coverage that protects you in situations where your guests are uninsured. If they cause damage or become injured while on your property, your insurance will typically cover the costs.
What’s Not Covered?If the guest’s actions fall outside the scope of your policy, such as illegal activities or actions covered by their own insurance, your policy may not pay for the damages or medical expenses.
Understanding the coverage provided by short-term rental insurance—and the situations where you may or may not be covered—can help protect your property and minimize risk. Whether you’re concerned about guest injuries, property damage, or the loss of income, short-term rental insurance is designed to address the unique risks you face as a host.
It’s important to work with an experienced agent at BlackArrow Insurance to ensure you have the right level of coverage for your needs. With the right insurance in place, you can focus on making your short-term rental business a success, knowing you’re protected against the unexpected.
For more information or to get a personalized short-term rental insurance quote, contact BlackArrow Insurance today.
