The first is renting out all or a portion of your primary or vacation home. The best way to insure these types of policies is as a secondary homeowners insurance policy with an endorsement that covers home sharing exposure. These policies cover the building structure, contents, and liability in the same way a normal homeowners policy would including when rented out on a short term basis. If someone relies on a vacation home rental for income to cover expenses, this may not be the best solution for coverage. 

The second type of short term rental is a home or condo that is used solely for short term rentals. These types of homes are common in areas with a lot of tourism traffic or not enough hotels to handle travelers. Many real estate investors look at these types of rentals over long term tenants because the cash flow can often be much higher! When a landlord decides to switch from a long term rental to a furnished short term rental, they must adjust their current insurance policy. 

Long term rental insurance policies rarely have enough coverage for all of the furnishings and contents inside. They also likely exclude or reduce damages caused by vacancy in between tenants. 

A properly endorsed rental property policy would cover the building, furnishings and contents, liability for short term usage, and often most importantly lost income due to a claim. The endorsement pricing is determined by the occupancy rate of the rental along with the other coverage amounts needed.

It is also important to note that many booking companies like AirBnB, VRBO, or local property management companies may offer some liability or damage protection from guests as well. 

What happens when there is a claim? 

If the tenant directly causes damage to the property or contents inside, we often recommend seeing if the booking website offers protection for tenant damage. Otherwise, if the damage is over the deductible and significant enough, this is always something that can be turned in to the rental property insurance company. Learn more about your short-term rental insurance options at Advisors in Greenville, SC!