Free Rental Guide!
Learn what it takes to rent your vacation home and maximize your rental income.
Free Rental Guide!
Learn what it takes to rent your vacation home and maximize your rental income.
Did you know that many homeowner’s insurance policies will not cover your vacation home if you are renting it? Avoid the potential of catastrophic risk by making sure your home is properly covered!
As noted by the New York Times, “Most homeowner’s and renter’s insurance policies do not cover regular commercial activity in the home.” The Times quotes a spokeswoman for the insurance provider USAA as saying, “If you’re conducting a business, on a full- or part-time basis, by renting out your home or apartment (or a room in your home or apartment) as a way to earn money, your homeowner’s or renter’s insurance policy probably would not provide liability coverage.” The legal resource website Nolo similarly points out that homeowner’s policies “almost always exclude coverage for homeowners who are running a business in their homes.” MainStreet likewise notes that “the typical homeowner’s insurance policy does not cover vacation rental as an approved use.”
That’s troubling news for many vacation home owners. If you’re renting out your vacation home, make sure your insurance policy includes coverage for this commercial activity. Nolo has some advice for the first thing you should do:
Call your insurance company and specifically ask if your policy covers short-term rentals by paying guests. Make clear how often you plan to rent out your home, whether you’ll be at home while renting, and how many people you’ll be hosting. Send a follow-up email outlining your insurer’s answer, and ask for confirmation so that you have everything in writing.
If your home is not covered for renting under your existing policy, you’ll definitely want to consider a new one. Fortunately, there are good solutions available. For example, Proper Insurance provides a comprehensive insurance policy custom-penned with Lloyd’s specifically for the unique risks of vacation rental properties, including coverage for buildings, contents, income, and liability. This is a policy designed to completely replace your current coverage and carries $1,000,000/$2,000,000 in Commercial General Liability, as well as guaranteed income for loss of rental income in the event of a covered loss.
We’ve recommended this policy to vacation rental owners in our program for considerable savings over alternatives. One of our owners was paying about $2,000 for a standard homeowner’s policy that didn’t cover his property for rental business. A commercial policy would have cost about $6,000, but Proper Insurance wrote a new policy for about $2,300 that completely covers the home and provides guaranteed loss of income.
Don’t leave yourself open to potentially catastrophic risk! Make sure you have a homeowner’s insurance policy that will provide coverage for renting out your vacation home.
For questions or insights about renting your property in a professionally managed vacation rental program, contact Holiday Vacation Rentals at 231-242-0730.
Alan R. Hammond is the founder and Managing Director of Holiday Vacation Rentals and Birchwood Property Management. He has served as a Director, Officer, and Treasurer of the Vacation Rental Managers Association (VRMA) and holds the Certificated Vacation Rental Manager (CVRM) designation. A recognized industry leader, Alan is featured in the book The Rental Game: Winning with a Professional Vacation Rental Team by Maureen Regan. Read more....
Jeremy loves the northern Michigan outdoors, and his hobbies include hiking, biking, exploring, and photography.
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