The Good, The Bad, and The Ugly of Vacation Rental Insurance!

November 20, 2013

Tips & Tricks

Vacation-Rental-Insurance2I have been wanting  to write about vacation rental insurance for quite a while. This is  a topic that most home owners don’t really understand and you need too.   If you own a vacation rental, chances are you are under insured or, more probable, not insured at all in regards to damages caused by your short term tenants.

I bet that when you decided to turn you home into another source of revenue(i.e a vacation rental), you may have called your insurance broker and simply told them what you were doing.  Most brokers will simply make notes in their database about your intentions and everyone thinks all is good.  The reality of things is much different.  Most major carriers will not cover short term rentals if you have a claim as they are an increased liability for the company.

You may have any number of things happen at your home while your vacation rental guests are staying at your home.  Your guests may drive a car through a garage, start a fire, or heaven forbid, someone were to perish at the home.  Most owners would be surprised to find out that they were simply not covered by their insurance policy when short term tenants were at the home.

Make Sure You are Covered!

If you talk to your insurance agent /broker and they don’t seem to see any problems using your home a vacation rental, make sure to cover yourself by demanding your agent make notes in your policy that specifically state that your home will be used as a short term rental.  Print out your policy, make sure notations are in the policy about short term rentals,  and this will be your proof if you ever do have a claim.

We manage over 40 properties and we make sure our owners add our company as an additional insured on their policy AND make sure the policy specifies that it covers short term rentals.

If your carrier won’t cover you there are insurance companies that specialize in short term rental insurance.  Policies are usually more expensive than a traditional homeowner’s policy but, understandably,  there is inherently more risk for the insurance company with this type of rental. I have included two companies we have used in the past:

CBIZ
Click this link for a quote:
Propel

 

Filling out the application for a vacation rental specific policy is a little different than a normal homeowner’s policy. You will be asked questions such as how much your home will be rented as a short term rental, how much your home will sit vacant, and if you will be staying at the property at all. You will also be asked about any amenities and/or special features you have at the house such as hot tubs, pools, outdoor kitchens, fire pits, decks, etc. The application only takes a few minutes and you usually can get an online quote within minutes.

Making sure you are correctly insured may take a little more time and effort but will be well worth the added piece of mind knowing you are covered if something were to happen.

Stay tuned for out next blog article that will talk about different entities to put your vacation home into to protect you and your assets even more.

About Greg

Greg is the owner of Pacific Coast Vacation Properties, a high end vacation rental management company located in San Diego, CA. He also owns a full service real estate brokerage company that helps owners buy vacation rental and commercial property. In his spare time, Greg volunteers for Habitat for Humanity and other charitable groups in San Diego.

View all posts by Greg

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