When you imagine your ideal vacation, do you see yourself living for a week out of a cramped hotel room that has mysteriously stained sheets, or do you see yourself lounging happily in a luxurious, private home? It’s no surprise that businesses like Airbnb and VRBO have exploded in popularity—especially in our area with the numerous attractions we boast. If you’ve ever been tempted to hop on the band wagon and start doing your own short-term property rentals, there are a few things that you should know so that your pockets can reap the full reward.

Homeowner’s insurance and the coverage offered by home-sharing companies such as Airbnb and VRBO may seem on the surface to provide sufficient protection for your new business venture.

           But consider this:

You own a condo and lease it on Airbnb. A family stays a weekend at the condo and forgets to shut a sink off before they leave. This causes the sink to overflow and damage several condos on the floor below.

If all you had was a typical condo policy (without short-term rental insurance),the claim would likely be denied, and the property owner would be stuck footingthe bill to repair all those neighboring condos.

Consider a slightly different scenario:

Instead of a condo, you own a house that you rent out to a family for a weekend. Not only do they leave the sink on, but they keep every single light on the entire weekend and crank the AC to arctic temperatures.

Now, the sink overflow has only damaged your property—which still most likely won’t be covered by the typical homeowner’s insurance policy due to specific exclusion of business-related activities—but you also have to face the wrath of abnormally high utilities. Who protects you from those?

If that wasn’t enough, let’s look at another situation:

You own a property that is being leased to a bachelorette party for the weekend. One member of that bachelorette party is underage and consumes a few too many alcoholic beverages with her friends. She ends up falling down and this causes bodily injury. Her family ends up suing the property owner for allowing underage drinking to occur on their property.

This claim would also more than likely be denied by a standard home insurance company, again leaving you to foot the bill for legal and medical expenses.

With each line of fine print, each claim that falls between coverages, another hole is torn into the coverage of your new source of income. That’s like walking out into the rain with an umbrella made out of Swiss cheese; sure, there’s some protection against the rain. But a lot of drops are getting through, and they’re going to soak you no matter what.

Long story short: you need short-term rental insurance

Short-Term Rental Insurance

This is like a fully functioning umbrella. Typically, these policies cover things such as: excess use of the utilities, identity theft, infestation, liability and liquor liability, loss of income (if guests damage the property to the point that it is uninhabitable), and property damage (accidental or deliberate),theft by guests and tenants, and the cost of replacing keys and changing locks.

Short-term rental insurance costs a little more than the standard homeowner’s insurance policy (though the exact premium will depend on similar factors), but the slight extra expense is absolutely worth it when considering the sheer amount of things that could go wrong while home-sharing, and how little of it will be covered by other policies and promises.

There are only a few carriers that offer this type of policy, but Town & Country Insurance has access to them, and our local independent insurance agents will gladly help you find the policy that works best for you and your rental!

Don’t carry a Swiss cheese umbrella into the rain. Get short-term rental insurance!

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