The Vacation Rental Property Insurance Difference
By April Klazema
Published: 06/01/15 Topics: Insurance, Property Management, Vacation Rentals Comments: -
A vacation rental property may look like a home, but in the eyes of an insurance company, it's a business. If you own a second home that you frequently rent out to temporary guests, then that property is a business and cannot be covered under a homeowner's insurance policy.
Even if the property was used as a residence at some point, the moment you start bringing in out-of-town guests for daily or weekly vacation rentals, the rules change.
What Do I Need Instead?
Most insurance companies will offer a specific vacation rental insurance policy that you can purchase to protect your rental properties.
This kind of policy will provide certain types of coverage that a homeowner's policy won't, including commercial liability insurance to protect you in the event that a guest is injured at your property.
Replacement and repair coverage is usually included as well, in case a guest steals from you or damages your property during their stay.
Why Do I Need Vacation Rental Insurance?
There are subtle differences between homeowner's insurance policies and vacation rental insurance policies.
For example, a homeowner's policy will include personal liability coverage, which essentially means that if a guest is injured while visiting your home—perhaps they fall down the stairs—then your insurance company will help defend you if you are sued and cover medical bills for the injured party.
Meanwhile, a vacation rental insurance policy offers commercial liability coverage, which offers the same basic type of coverage, but for a business instead of a person or family.
Homeowner's insurance policies exclude commercial activities from protection, so if a renter at your vacation home falls down the stairs, the incident won't be covered under the personal liability section of your homeowner's insurance.
Instead, you will need to have commercial liability coverage to be protected, as the injury was suffered by a customer instead of a guest. Similar differences and separations apply for other types of coverage (theft, property damage, etc.) as well.
Unsure if you have the correct vacation rental property insurance? Today is the day you need to find out, before it is too late.
April Klazema – Author
Vacation Rental Association