The short-term rental market is booming right now - and it's showing no signs of slowing. This type of rental tends to be aimed at holidaymakers or those looking for accommodation, somewhere to stay while attending a work conference, for example. Short-term rentals are usually for stays from one day to several weeks in length and can be found on platforms such as Airbnb.
What Type of Insurance is Needed for Short-Term Rentals?
A short-term rental insurance policy will cover the landlord where they have guests paying to stay in their home. Depending on the insurance provider, this additional cover can either be added onto an existing home insurance policy as a rider, or a separate policy may need to be taken out.
There is usually no need for short-term rental insurance for friends or family members staying with a host for free, as this tends to be covered under a standard home insurance policy.
Short-term renters insurance is also available for those who rent their property and wish to sublease it to holidaymakers. Before proceeding with this, however, it's vital to check the rental agreement to make sure that subleasing the property is allowed. If everything is fine on this score, then, as with short-term rental insurance, you may be able to add a rider to your existing renters' insurance to extend your coverage. Honeycomb Insurance does not currently offer insurance for short-term rentals.
What Does Short-Term Rental Insurance for Landlords Cover?
A short-term rental insurance policy for landlords typically covers the following:
- Excess use of utilities
- Loss of rental income
- Liquor liability
- Identity theft
Many short-term rental insurance providers also cover theft of your personal belongings stored on the premises that have been rented out. Most insurance providers will allow the landlord to choose a rider or policy that either covers their whole property or only the part of it being leased out as a short-term rental.
How much does short-term rental insurance cost?
The average cost of short-term rental insurance is $2,000 per year. The cost of short-term rental insurance will vary significantly from property to property and is impacted by, in general, many of the same factors as a standard homeowners insurance policy - for example, the property's location, its condition, local crime rates, and your credit-based insurance score. Ultimately, the amount you'll pay for your insurance will depend on the underwriters' perception of the perceived risk attendant on your specific rental situation.
You can choose to either take out a short-term rental insurance policy that'll cover your property for a large part of each year (for multiple guests) or on a pay-by-night short-stay basis, depending on your needs.
Alternatives to Short-Term Rental Insurance
This type of cover is usually only appropriate for longer rentals. Landlord insurance can be taken out by those who will be leasing out their property, typically for a minimum of ninety days (although it usually isn't designed for cases where the landlord is expecting to be renting the property out to new tenants every ninety days).
Landlord insurance usually covers the following eventualities:
- Damage from covered perils such as wind, fire, lightning, hail, or electric/gas malfunctions
- Liability if someone is injured on the rental property
- Business income loss in the event that the property/unit becomes uninhabitable
A standard homeowners insurance doesn't cover rental activities and related risks, so it's vital to consider taking it out if you'll be renting your home for a longer-term period. Landlord insurance provides effective property insurance coverage, amongst other important components.
Some insurance providers offer policies designed to cover your property both as your home and as a short-term rental at the same time. Adding a rider for short-term rentals into an existing policy can be a way of saving money, especially if you won’t be renting out your property continuously throughout the year.
If you're interested in taking out short-term renters insurance for 3 to 6 months, you may be able to have a rider added to your existing renters' insurance policy to cover you in this circumstance.
Sites such as Airbnb provide hosts with some automatic basic insurance protection, although this tends to be limited to liability protection and damage to property.
The platform recommends that all hosts obtain separate building insurance and content cover and should also consider taking liability cover and loss of booking income. The latter may be useful in the case where the hosts need to temporarily cease taking Airbnb bookings due to an event, such as a fire, that’s covered by the policy. The platform suggests, too, considering home emergency cover: this provides protection in the event that emergency assistance needs to be called out to the property due to, for example, a burst water pipe.
Are You Automatically Covered If You Rent Your Apartment through Airbnb?
Although hosters renting their properties via the Airbnb platform enjoy some automatic protections, these are not normally as extensive as those provided by a short-term rental insurance policy.
This automatic host protection includes $1 million worth of primary liability cover relating to both bodily injury and property damage. You will also be covered for any damage that guests cause to common areas, such as building corridors and lobbies. The Airbnb host guarantee covers listed property and possessions up to the value of $1 million - although the company advises that hosts should obtain additional cover for their listed property as the host guarantee is not considered to be an insurance policy.
Airbnb host protection cover, however, does not include loss of earnings, damage to the property from environmental issues such as mold, or damage or injury from intentional actions.
- Short-term rental insurance is available for those wishing to lease out their property (or part of their property) to holidaymakers or those looking for other short-term accommodation.
- Short-term renters insurance can be taken out by those currently renting their property who would like to offer it (or part of it) as a short-term sub-let - as long as there are no clauses prohibiting this in the rental agreement.
- The cost of short-term rental insurance and temporary renters insurance will depend on a variety of factors, all linked to perceived risk.
- Landlords insurance or hybrid insurance policies are alternatives to short-term rental insurance, although the former is most suitable for longer-term lets.
Airbnb hosts benefit from some automatic protection via the platform, although the cover provided is not typically as extensive as that offered by a short-term rental insurance policy.