Homeowners insurance was designed many years ago to cover things like fire, theft and liability but things got confusing when you started to run a business out of your home. Home-sharing and short-term rental activities are considered a business and require special coverage. For the purpose of this article, we will use the term short-term rental but will encompass home-sharing insurance as well. Here are seven important coverages to consider when insuring a short-term rental:
- Liability. The most common liability claims are slip and falls or a dog bite. If you are negligent, i.e., your handrails are not to code and someone falls or you dog bites someone home-sharing with you, you could be responsible for their injuries. Airbnb and home-sharing platforms provide liability coverage for this as well but what if you rent your home outside of the platform? This coverage crucial and you need to make sure its included.
- Dwelling. The most common property insurance claim is damage from a leaking water pipe. What happens if in between guests the water line to the toilet on the top floor leaks and damages all three floors? Airbnb will not cover this damage, you are in between guests and if you don’t have the proper STR policy or endorsement, your normal insurance will not cover you and you could be out over a hundred thousand dollars. There are 17 standard perils plus a few endorsements in a homeowner or landlord policy that will covered if you have added the right coverage to your property.
- Loss of Rent or Loss of Income. This could be your third biggest loss. You need loss of income insurance to protect your STR income in the event of a covered loss. We have a client with a high-grossing STR in Hurricane Utah who filed a claim and the lost income was equal to the amount of water damage. $20,000 in water damage and $20,000 in lost income while the home was under repair. Make sure you have enough coverage for the lost income especially if you have a high grossing STR.
- Contents. Your furniture, televisions and other household items are STR tools that make you money. They also are the subject of the most confusion within an STR policy. Within the contents portion of the policy you can have RC – replacement cost or ACV – actual cash value. You can also have coverage for theft or no coverage for theft. Make sure you know what you have and that it’s enough.
- Property Managers Commission: Your property manager will be more motivated to rent your property over your neighbors if they know they will get paid while your property is being restored from a covered loss. You do not need this coverage if you manage your own property.
- Bed Bug Coverage: In addition to the treatment and replacement of property, you would also be compensated for lost income while the property cannot be rented. The lost income can sometimes be more than the cost to remediate the bed bugs.
- Personal Injury: Could help pay for the legal bills from a wrongful eviction or even discrimination. Utah STR and landlord laws can be complicated, and you almost have to be an eviction attorney to navigate the two. Protect yourself with this valuable coverage.
These are just a few of the valuable coverages that every short-term host should be aware of. To best navigate short-term insurance coverage, reach out to an Anderson Insurance expert.
Whether you are home-sharing part of your own home or renting out the entire property, it’s important to know what short-term rental endorsements and coverage are added onto the underlying coverage. If the underlying coverage or foundation of the policy is inadequate, you could also be exposed to a loss that is not covered. In addition to the coverage mentioned above make sure your policy includes the following:
- Water & Serwer Backup
- Ordinance & Law
- Service Line Coverage (when available)
- Damage to the home from an exterior water or irrigation pipe
Call or click for more information on how to best protect your short-term rental.