Airbnb Coverage

What Airbnb Insurance Covers

(And what you need to know before you buy a rental or vacation home)

Airbnb Renters and Vacation Home Coverage

Owning a second home is a great investment, but just like any other piece of property you need the proper homeowners insurance and will need extra coverage if you're planning on renting out your second home on Airbnb or for other vacationers.

An independent insurance agent is a gem when it comes to finding the right coverage for your rental home and making sure it's insured how it needs to be. Don't be in the dark when it comes to insurance, instead get yourself a trusted advisor and pick their brain.

What Is Rental, Airbnb, or Vacation Home Insurance?

Rental, Airbnb, and vacation home insurance is an insurance policy that protects the structure and the contents inside of your second home. It differs from your standard primary homeowners insurance because it is designed to properly protect your property whether you're using it as a rental or a vacation home. It also has to be purchased separately or as an extension of your existing homeowners policy. Depending on which scenario your property is being used for will determine exactly what is in your vacation home insurance package. 

To understand the different coverage options, you should know the differences between each:

Rental Home: This is a property you would own and rent out on a long-term basis, lasting anywhere from 6 months, 12 months, or longer in tenant occupants. Rental coverage typically includes:

  • Liability: This provides finances to cover bodily injury and property damage that is the owner's fault.
  • Dwelling: This provides a preset dollar amount to replace or repair the property.
  • Personal property: This provides a present dollar amount for furnishings and belongings that are kept on-premises.
  • Other coverages: These are included or added other coverages dependent upon each carrier and their offerings.

Airbnb home: This is a property you would own and rent out on a short-term basis, lasting anywhere from 24 hours or weeks at a time that the tenant occupies. Airbnb and similar companies tend to offer their own type of protection, but it won't necessarily take the place of a comprehensive insurance policy. For an Airbnb home, you want coverage that includes:

  • Liability: This provides finances to cover bodily injury and property damage that is the owner's fault.
  • Dwelling: This provides a preset dollar amount to replace or repair the property.
  • Personal property: This provides a present dollar amount for furnishings and belongings that are kept on-premises.
  • Other coverages: These are additional other coverages specific to Airbnb rental homes dependent upon each carrier.

Vacation home: This is a property you would own and occupy as your secondary home. You would occupy this vacation or secondary home up to 6 months out of the year in most policies. Coverage is typically similar or the same as your HO-3 regular homeowners policy written for your primary home. It may have increased vandalism and theft coverage depending on your insurance company. 

How Do Insurers Define a Vacation Home?

What Is Vacation Home Insurance?

Most insurance companies are pretty clear and have a monthly limit on the amount of time you should be using your vacation home. If you are using it more months than you do your primary home, then you should have a primary homeowners insurance on the property. 

Your independent insurance agent will be able to counsel you on the best way to write your properties to make sure you are in line with the guidelines of each policy form. The last thing you want to do is have a vacation or secondary home policy on what really needs to be a primary home. Considering that you have specific coverages on a primary home that is often less expensive than a vacation policy because you are occupying the primary home on a regular basis, then you want to make sure it's right.

What Does Vacation Home Insurance Cover, Exactly?

If you're only using your second home for vacation purposes and are not renting to others, then vacation home insurance covers property damage, liability claims, burglary, recreational vehicles, and more depending on the conditions of your policy. The policy will cover what typical homeowners insurance covers with sometimes additional theft and vandalism coverage due to the fact that you will not be occupying your vacation home all months of the year. However, there are a variety of things that vacation home insurance will not cover including:

  • Flood and earthquake damage
  • Maintenance issues that result from neglect such as rust, mold, termites, etc. 
  • Any damage caused by a nuclear hazard
  • Damage caused by renting out your home for an extended period of time (this would require a separate policy or endorsement)

Typical vacation home coverages look something like this:

  • Personal liability: This is for you and your guests.
  • Personal property: This coverage is for your contents that support the home.
  • Dwelling: This coverage is for the home itself in case of a claim from a covered peril.
  • Other structures: This is coverage for detached garages, sheds, barns, and the like .
  • Other coverages: These can be anywhere from identity coverage, additional or extended theft or vandalism coverage, and more depending on the carrier and their offerings.

If you plan on renting out your vacation home for the months that you are not vacationing in it yourself, you'll need additional coverage. For short-term rentals of less than 30 days, you can usually get an endorsement from your insurance company. If you plan on renting your property out long-term, you'll most likely need to seek a landlord policy.  A landlord policy includes coverage for the following:

  • Commercial property insurance that covers damage from natural and human causes
  • Liability insurance that covers legal representation and damages if you're sued
  • Loss of income should your rental property become uninhabitable
  • Workers' compensation if you have maintenance workers or property managers who are injured on the job
  • Umbrella coverage

Why Won't a Regular Home Insurance Policy Do?

You may be thinking that if it looks like a regular homeowners policy and acts like a regular homeowners policy, then why can't you just buy a regular homeowners policy to cover your rental, vacation, or Airbnb? Well, the insurance companies don't see it that way. They are taking on more risk with a rental, vacation, or Airbnb property than they ever would with your primary home.

The insurance companies have to take into account multiple, unmonitored parties staying on the property. Whether it's your family, friends, or renters, the carriers can't know how each party that stays at your vacation home is going to treat it or what their records are. The carriers have to provide coverage for all of them because you permitted them to use your home. They have to account for the property being seemingly vacant for periods of time which opens the doors to thieves and vandals.

If Family/Friends/Airbnb Renters Use My Vacation Home, Will My Vacation Home Insurance Cover Them?

Vacation home insurance is designed to protect you, not your guests. If friends, family, and Airbnb renters are staying in your home and experience property damage or slip and fall while getting out of the hot tub, you are not responsible for replacing their property or paying their medical bills. Now, if a loose floorboard causes a guest to roll their ankle and they decide to sue you, then your vacation home insurance will cover the legal costs and any medical bills.

Vacation Home Insurance Costs

Vacation, rental, and Airbnb homeowners insurance isn't the cheapest thing on the market. Since the insurance companies are taking on more risk factors than they would with your primary home because there are more variables, they will charge accordingly. In most cases, you can estimate that your vacation, rental, or Airbnb insurance costs will be about double what your primary homeowners insurance rates are. 

Each carrier and policy is a bit different, so it's best to discuss with your independent insurance agent on your specifics. There are no ballparks in insurance figures because there are too many variables. 

Benefits of an Independent Insurance Agent

Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility, and competitive pricing while working for you. And as time goes on and your needs change, they'll be there to help you adjust your coverage, up or down, to make sure you're properly protected without overpaying. Find an independent insurance agent in your community here.

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