Well, here is it. The truth about insurance that no one is telling you.
If you have a home that you are doing short-term rentals out of and you only have a regular Home Owner’s Policy, you probably are wasting your money because you are NOT covered.
If you have a Landlord’s Policy, you have the same problem. You are probably not covered.
If you are depending on Airbnb’s $1,000,000 policy, you are leaving huge gaps in your insurance needs.
So, now that I’ve scared the bejesus out of you and have your attention, let me just add that’s it’s an easy fix.
First, you want to ask your agents some questions and you want to SEE, with your own eyes, meaning have your agent point out to you, specifically where in your policy that these things would be covered by a short-term renter.
What you need to understand, too, is the fact that what we (as Airbnb hosts) consider “Guests” are not really guests under the law. A guest is usually a person who we invite into our home. A “Guest” that PAYS to stay in our home isn’t really considered a guest at all under the law or in terms of insurance coverage. A paid transaction, an exchange of money, has taken place – a legal business transaction. So, in the eyes of the law, this doesn’t even fall under traditional renting. You are now a Business. Therefore, you are going to need (Short-Term Rental) Business Insurance.
Good to know, right? Critical to know, really.
Thousands of people are walking around thinking they are covered right now but aren’t. What’s worse is that some insurance agents believe that they are covering their clients, too, when they are not. Verbiage – the way in which your policy is written – is critically important. You want to see your policy and make certain that the way it is written clearly describes and covers your paid “Guests” as short-term renters.
So, Airbnb and VRBO give you some peace of mind but there are gaps in their coverage. You need to know what they are. Also, all coverage is at their discretion, so if you have no tangible proof, you may have challenges. An additional Business Policy or Umbrella Policy is highly suggested.
So, what type of coverage do you need?
What do you need to know before going out and looking for Comprehensive Commercial or Business Insurance?
Options to weigh when you are looking for coverage:
There are a few quick answer companies like MyPropertyProtect.com who offers protection to your property from guests. You get a $10,000 policy with a $250 deductible for $5 a night.
If you want something more substantial, as I recommend, I would look into companies like Proper Insurance. They specialize in finding coverage for short-term rentals and are rated A+ on the Better Business Bureau’s website. Plus, they are backed by Lloyd's of London, the oldest insurance agency in the world. We've attached their brochure at the bottom of this page.
We hope you will use this article to find the best coverage for your STR Property and wish you great success in your business.
Written by Michelle Russell
For the Short-Term Rental Revenue Podcast
© 2019 The Prosperity Process LLC
P, S. If you are doing events on your property, like weddings with catering, or if you have other businesses on-site, like a gift shop or laundromat, you will need separate additional coverage that we didn’t cover here. Do your due diligence and write out all the scenarios that could occur and find an agent that helps you cover every single one.
Proper Insurance has a GIFT for you. Download their 2-page Brochure (by clicking the image below) that will answer many of the questions you may have about Short-Term Rental Insurance. You can also contact Proper Insurance Risk-Free just to ask some questions by calling them at 888-631-6680. Remember, they're backed by Lloyd's of London, the oldest insurance company on the planet. If you already carry insurance, at a minimum, you can get a quote from Proper and get a free coverage comparison.
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