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Colorado Insurance Blog

Vacation Rental Property Insurance: What You Need to Know

What you need to know about vacation rental property insurance

A few years ago, vacations rentals were few and far between. These days they seem to be on every other street, especially in large cities and mountain towns. Companies like Air Bnb and VRBO have exploded in popularity, and for good reason.

There are many benefits to choosing a vacation rental over a hotel. More privacy, wider location availability, and access to a kitchen are just a few perks. 

The biggest plus for my husband and I is that many of them allow us to bring our dogs with us. That’s much harder to do when we stay in a hotel. Anywhere we can bring our dogs is at the top of our list for places we want to go. So for us choosing a vacation rental is a no-brainer.

With the popularity skyrocketing, the demand for vacation rentals is increasing each year. As a result, more people are choosing to list either a room in their home or their full home as a vacation rental.

Many people that own a second home in the mountains take advantage of the vacation rental market. Renting out the property when they aren’t there helps pay for the second mortgage. It’s a great way for people to have their dream getaway without the expensive price tag.

While owning a vacation rental can be a great investment, some insurance carriers aren’t a fan. Most insurance companies consider short-term rentals a business venture.  Home insurance doesn’t often cover business activities, so a standard policy might not suit your needs.

Even if you don’t rent your home often, you’ll still need to get specialized vacation rental property insurance coverage.

When vacation rentals first started to gain popularity, the options to insure them were slim. Now there are quite a few options available, though not every carrier offers coverage. As the market grows, more companies are starting to get onboard.

When looking to insure a vacation rental, it’s important to disclose that the property is rented. Even if it’s only rented a few times per year.

Each carrier has a different way of accounting for the rental aspect, so they need to have the information upfront. Some carriers will write an entirely different kind of policy. Others will simply add an endorsement to bridge that coverage gap.

If you don’t disclose that information it could leave you without coverage in the event of a claim. It’s far better to find out up front if your insurance company doesn’t provide the coverage you need. That way you can find a different company that can properly cover your property.

Coverage for the home itself isn’t the only thing to consider when insuring your vacation rental.

It’s just as important to have adequate liability protection on your policy. You might not know the people renting your home or what risks they could bring. As the homeowner, you’re responsible for things that occur on your property.

Your renter could get hurt on the property, or they might bring a dog that injures someone else. If that happens, you could be found liable and face a lawsuit as a result. Liability coverage on your home insurance can cover judgements against you. It’ll also cover the legal support needed to fight unwarranted accusations.

There may be some coverage offered by your vacation rental site. Air BNB’s coverages are listed here, and you can search VRBO’s help site to learn more about their insurance coverage. Those coverages are like a bonus to the coverage you have on your home insurance. While they may be helpful, they rarely encompass all risks that come with having a vacation rental.

If you’re not sure if you have the right coverage on your vacation rental, give us a call. We write with over 15 insurance carriers so we can find the right fit for your needs.

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