Do I need a special vacation rental insurance policy for my property?
So how do you know which is the right insurance to protect your rental? To help shed some light, here are some frequently asked questions regarding vacation rental insurance.
Does HomeAway provide or recommend any insurance products for my rentals?
- HomeAway Assure™ is a CBIZ Insurance Program tailor-made to protect against the specific hazards of your vacation rental activity. You’ll find the most comprehensive coverage at a good price. You can find more information on HomeAway Assure by clicking here.
- A business or commercial policy will likely cover your vacation rental activity in a more comprehensive way than a homeowner policy. This is a matter of terminology for the insurance companies and does not mean that your vacation rental acitivity will necessarily be a business or commercial activity for other purposes.
- Regular homeowner’s insurance typically specifically excludes vacation rental activities, which insurance companies usually classify as “business” activities.
- Personal liability.
- Personal liability coverage will not respond to business activities, such as charging money for someone to stay at your vacation rental. Instead, personal liability is intended to cover you in the event that someone claims that you have caused them bodily injury or damaged their property as a result of your personal actions. What you likely need for your vacation rental business is commercial liability coverage (business liability), even if your vacation rental activity is not considered commercial or business activity for other purposes. This is because commercial liability is specifically designed for business activities like your vacation rental and therefore, does not exclude coverage.
- HomeAway Assure™ provides both personal and vacation rental when the rental is a primary residence. It is designed to fully replace a homeowner’s policy.
- HomeAway Assure™ is designed to fully replace a homeowner’s policy. It is not supplemental coverage to a homeowner’s policy. The coverage extends to the property whether it’s unoccupied, or occupied by a guest, friend, family, or the owner.
- A personal umbrella will not follow vacation rental activities. A personal umbrella will follow you anywhere you go in the world; but only for personal negligence. You would need a specific (called commercial, in insurance terms) umbrella for protection over your vacation rental activity.
- HomeAway Assure™ provides income protection on actual loss sustained.
- HomeAway Assure™ allows up to three separate premise addresses per policy. However, it’s always suggested to separate them out as all three premises would share the same liability limit.
- Everyday property insurance or casualty insurance on your primary policy is not meant for short-term rentals. That means that if you run into an incident with a renter staying in your home, your insurance provider may not allow claims since the home was not occupied by you. Plus, they may even cancel your coverage. It is best to be up front about the uses of your home in order to protect your home and obtain the proper coverage.
- Everyone is subject to the language in their insurance policy. Always ask your agent to show you in the language where you are covered or not covered.
- You should never misrepresent facts about your vacation home. If it is discovered that you’re renting and you have a claim, your insurance carrier could deny the claim and/or drop your coverage.
- If your association has a master insurance policy or a blanket policy, it likely covers the common grounds and the exterior walls of the building. This leaves the inside of your unit, your personal contents, liability and loss of business income for you to cover, which is where HomeAway Assure™ comes in.
- Since many vacation properties are located near bodies of water like oceans or lakes, the insurance can be a little more expensive because these are considered high-risk areas. Still, if the location of your vacation home is prone to natural disasters, it is wise to invest in this type of insurance. If you are purchasing a vacation home, be sure to research the cost of this type of insurance before buying because it may affect your final decision on the exact location of your vacation home.
- It is recommended to get at least $1 million dollars of liability coverage per occurrence. A million dollars is likely the most you'll be able to get with an individual insurance policy. If you would like additional coverage, you can always purchase excess liability through HomeAway Assure™.
- Most insurance companies do not have the ability to provide liability insurance for a residential property that is also a business entity, like an LLC. HomeAway Assure™ on the other hand will allow the policy to be written under the name of your LLC.
- Using sites like www.ambest.com, you can review financial ratings, history of the company, how long they've been in business, etc. You should look for an A-rated company as anything less may not have the financial backing to pay out claims in the event of a large loss.