Protecting your rental home is of the utmost importance when you own an investment property, whether it be a dwelling that you rent out on a short or long-term basis. As a landlord, understanding the difference between what kind of insurance is needed for both long-term and short-term rentals is essential. In the event of a claim, the correct insurance must be in force.
In the insurance world, a property that is rented for less than 30 days at a time is typically considered short-term. These can be found on websites like VRBO, Airbnb, Vacasa and more. More and more cities are now requiring short-term rental owners to carry a license and $1,000,000 in liability insurance as the short-term rental market is becoming a big business. If the property is rented for more than 30 days (often referred to as a long-term rental), a different insurance policy is necessary.
Landlord insurance (sometimes referred to as Dwelling Fire) is your best bet to protect your property that you are renting to someone for more than 30 days at a time. Landlord insurance includes coverage for property damage, liability against any lawsuits, and loss of rental income. An important thing to note is that a landlord policy does not typically cover short-term rentals.
Typically, your personal home insurance policy does not protect you when you’re renting out your house on a short-term basis, even if you only do so occasionally. Before renting your home to anyone, you should read your homeowners insurance policy carefully. Most homeowners insurance policies include a “business exclusion” clause that prohibits you from coverage if you are running a business from your home, and many insurance companies consider home-sharing a business. This means that if a claim is filed by your renters while you are renting your home on a short-term basis, you may be at risk of being uninsured and could be held personally responsible to settle any financial claims.
If you rent your home to short-term guests, you may need to purchase commercial insurance coverage, which can be expensive. Another option would be to research specialty insurers who are offering vacation rental insurance or pay-per-use home share insurance coverage for short-term hosts.