Do you need short-term rental insurance?
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BLUEPRINT
Updated 2:46 p.m. UTC Nov. 1, 2023
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Key points
- If you rent out your home on a frequent, short-term basis, you may need short-term rental insurance.
- Short-term rentals are considered business use of a house, which is usually excluded from homeowners insurance coverage.
- You may be able to add short-term rental coverage as an endorsement or rider to your homeowners insurance policy.
Lemonade
What is short-term rental insurance?
Short-term rental insurance, or home-sharing insurance, covers you while guests are in your house. Short-term rentals, such as those booked through Airbnb and Vrbo, are considered business use of a house, which is generally excluded from homeowners insurance coverage.
The types of coverage included in a short-term rental insurance policy vary by insurer but typically include liability insurance, which covers bodily injury and property damage to others.
If a short-term renter is injured while staying in your home, liability insurance can pay for their injuries as well as your legal defense and any settlement or damages if they sue you, up to your policy limits.
Liability insurance can also cover property damage to others if, for example, a guest accidentally starts a kitchen fire that spreads and damages your neighbor’s property.
What is covered by short-term rental insurance?
Short-term rental insurance policies vary by insurer. Coverage may include the following:
- Dwelling: Pays to rebuild or repair the structure of your house if it’s damaged by a covered loss in your policy, like fire.
- Personal property: Pays to repair or replace the property in your home, like furniture and appliances.
- Liability insurance: Pays for an injured party’s medical expenses and your legal fees if a guest or tenant is injured and you’re found to be at fault.
- Loss of rents: Pays for your loss of income if your rental property is damaged and you can no longer rent it out.
What short-term rental insurance does not cover
Some typical causes of damage not covered by short-term rental insurance includes the following:
- Flood damage.
- Earthquake damage.
- Maintenance issues.
- Wear and tear.
- Pest infestations.
- Mold or rot.
Who needs short-term rental insurance?
If you rent out your home on a frequent, short-term basis, you may need short-term rental insurance. Your insurer may offer short-term rental coverage as an endorsement or rider that you can add to your home insurance policy for an additional cost.
If you only rent your home out once or twice a year, you might be covered by your homeowners insurance and not need to purchase additional coverage. This will depend on your insurer. It’s best to ask your home insurance company if your homeowners insurance policy will cover the occasional rental.
If you rent your home out on a full-time basis, you’ll need landlord insurance.
How to host your rental as a renter
If you are a tenant and want to rent out a room or your entire rental property for short periods of time, you may not be able to. Many landlords forbid you to rent out their property in the lease.
If your landlord does allow you to rent out the rental, your renters insurance likely won’t cover injuries paying guests sustain or property damage. Just like home insurance, renters insurance excludes business coverage and may consider you making money off renting out property to be a business activity.
If you sublet your apartment for a longer period of time, contact your landlord. The new subletter may want to get their own renters insurance policy as they typically will not be covered by yours.
How to get short-term rental insurance
You may be able to add short-term rental coverage to your homeowners insurance. Check with your insurance company to learn if it offers short-term rental coverage as an endorsement, or coverage add on. You can also buy a separate short-term rental insurance policy through an insurer that specializes in it, like Foremost.
Who offers short-term rental insurance
| COMPANY | SHORT-TERM RENTAL INSURANCE |
|---|---|
Allstate
| Allstate’s HostAdvantage home-sharing insurance offers protection from theft and damage from a large and reputable insurer with an easy claims process
|
Farmers
| Farmers offers a prepackaged coverage bundle for seasonal or vacation homes, as well as bundling discounts for multiple policies
|
Nationwide
| Nationwide offers the option of either adding a rider to a Nationwide homeowners policy or getting a business liability policy
|
Proper
| Proper offers policies custom-made for the purpose of Airbnb-style rental homes, offering no limits on damages caused by a renter and underwritten by the well-established Lloyd’s of London
|
Safely
| Safely is another bespoke Airbnb-style rental insurance option, boasting an average of 3.8 days to pay claims and complimentary guest background checks
|
Alternatives to protect your rental
Home-sharing services like Vrbo and Airbnb offer their own insurance policies to hosts. However, this insurance may not fully cover your property or liability. Be sure to read the details carefully.
You can also purchase landlord insurance, but this might not be suitable if you only rent your house out on a short-term basis and could result in you overpaying coverage.
Short term rental insurance FAQs
If you rent your property out for more than five months, you’ll likely need a landlord insurance policy. If you rent your property out on a short-time basis, you’ll need short-term rental coverage.
If you do not tell your insurance company that you are renting out your home, any claim you file that is short-term rental related will likely be denied.
Your homeowners insurance may cover a short-term rental if you only do it once or twice a year — this will depend on your insurance company.
Most home insurance companies exclude coverage for business activities, and a rental property may qualify as that.
Your homeowners insurance company may offer short-term rental coverage as an endorsement that you can add to your home insurance for an additional fee.
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