Does Homeowners Insurance Cover Short-Term Rentals for Profit

Homeowners insurance can be a bit confusing, especially when it comes to short-term rentals. Many people assume it will cover their property, but the truth is, it depends on the policy and how you're using your home.

Some homeowners insurance policies may exclude short-term rentals, while others may have special provisions for them. For example, if you're renting out your home on a platform like Airbnb, your policy might not cover you if you're not present on the premises.

If you're planning to rent out your home for profit, it's essential to review your policy carefully to see if it covers short-term rentals. This could save you from costly surprises down the line.

In some cases, you might need to purchase a separate policy or add an endorsement to your existing one to cover short-term rentals. This can be a bit more expensive, but it's worth it for the added peace of mind.

Standard homeowners insurance policies typically don't cover short-term rentals. They're designed for primary residences and don't provide adequate coverage for the unique risks associated with renting out your home on a short-term basis.

Renting out your property for profit might not be covered under a standard policy, as it's considered a business activity. This can leave you exposed to higher costs in case of significant damage or liability.

Homeowners insurance may have lower liability limits compared to what's needed for rental activities. This means you might not have enough coverage to protect yourself and your property in case of an accident or damage.

Platform-provided insurance, like Airbnb's AirCover for Hosts, may have caps on coverage amounts or not cover certain types of damage or incidents. This can leave you vulnerable to out-of-pocket expenses.

To fill these gaps, consider additional insurance options such as short-term rental insurance or umbrella liability insurance. These policies can provide comprehensive coverage for property damage, liability, and loss of income.

Here are a few companies that offer short-term rental insurance:

It's essential to review your homeowners insurance policy carefully or consult your insurance provider to understand what coverage you have and if it's sufficient for hosting guests.

A standard homeowners insurance policy generally won't cover damage to a home or section of your home if the loss happens because of an Airbnb stay. However, it may cover acts of nature like catastrophic storm damage to the structure of the home that had nothing to do with the Airbnb stay itself.

You'll need to add short-term rental coverage to your base policy to be fully insured for losses that occur during a guest's stay. This is because your base policy may not cover commercial or business use, which is considered a business activity exclusion.

Some companies may only require you to add on additional coverage, or an endorsement, to your standard homeowners insurance policy, while others have completely separate insurance policies specifically intended for frequent but temporary rentals.

Here are three ways to obtain short-term rental insurance for your Airbnb or Vrbo property:

Allstate is a US insurance company that offers protection for Airbnb hosts. They provide coverage for stolen belongings while guests are staying in the property and accidental damage protection of up to $10,000 per rental host period.

If you're renting out your home on a regular basis to generate income, Allstate's HostAdvantage Home-Sharing insurance is a good option. This special coverage protects your personal belongings from theft or damage caused by renters.

Here are some key facts about Allstate's short-term rental insurance:

Allstate's coverage is a great option for hosts who want to protect their personal belongings and property from damage caused by renters.

Airbnb offers host liability insurance as part of its AirCover for Hosts protection, which provides up to $1 million of coverage against third-party claims of bodily injury or property damage. This policy also provides $3 million in coverage for damages to your personal property or the home.

You may be wondering if Airbnb's Host Guarantee is insurance, but it's actually a slim set of circumstances where they may reimburse you in the event a guest damages or steals your stuff. Your homeowners insurance or vacation home insurance may protect you when the property is being used for personal use, but not for commercial or business use.

Airbnb's Host Protection Insurance is “primary” insurance, meaning if a liability claim arises and it's covered, Airbnb will handle the claim and you don't have to use your personal insurance. With Host Protection Insurance, you're covered up to $1 million in the following types of circumstances: a guest slips and falls in your home, is injured, and files a lawsuit against you.

However, Host Protection Insurance won't cover you in certain circumstances, such as if your guest intentionally injures someone in your building and you're sued. You may also not be covered if a guest is injured in a common area of an apartment or condo building and a lawsuit is brought against both you and the landlord.

If you're renting out part of your home on a regular basis to generate income, the insurance company generally views that as business activity, which is not covered by a homeowners policy. Instead, you'd need to purchase business insurance.

Some companies, like American Family Insurance, offer short-term rental coverage if you plan to rent your homes for less than 62 days per year. Allstate's HostAdvantage Home-Sharing insurance is special coverage that protects your personal belongings when renting out your home.

To fill the gaps in platform-provided insurance, consider additional insurance options such as short-term rental insurance, which can provide comprehensive coverage including property damage, liability, and loss of income. You may also want to consider umbrella liability insurance to provide additional liability coverage beyond what your primary insurance policies offer.

Homeowners insurance may not provide adequate coverage for short-term rentals, so it's essential to review your policy carefully or consult with your insurance provider.

Typically, standard homeowners insurance policies have exclusions for business activities, limited liability coverage, and property use restrictions, which can leave you exposed to higher costs in case of significant damage or liability.

Rental platforms like Airbnb and VRBO offer some insurance coverage for hosts, but it's often limited, with coverage caps and gaps that can leave you vulnerable to out-of-pocket expenses.

You might need additional coverage, such as short-term rental insurance, which can provide comprehensive coverage including property damage, liability, and loss of income.

Here are some insurance companies that offer short-term rental coverage:

Short-term rental coverage typically covers loss of rent, damage to the property of others, theft losses, and comprehensive damage protection.

Liberty Mutual's base home insurance policy covers short-term rentals for less than 32 days a year.

If you rent out your property more than 32 days, you'll need to add the Liberty Mutual HomeSharing Coverage endorsement for coverage.

Proper, cBiz, and Slice are companies that offer short-term rental insurance specifically for properties rented out on platforms like Airbnb.

Slice, for example, allows you to insure your property on a per-day basis for around $7 a day.

Standard homeowners insurance policies may not provide adequate coverage for short-term rentals due to exclusions, limited liability coverage, and property use restrictions.

Rental platforms like Airbnb and VRBO offer some insurance coverage for hosts, but it's often limited, with coverage caps and gaps that can leave you exposed to higher costs.

To fill these gaps, consider additional insurance options like short-term rental insurance or umbrella liability insurance.

Short-term rental insurance can provide comprehensive coverage including property damage, liability, and loss of income.

Umbrella liability insurance can provide additional liability coverage beyond what your primary insurance policies offer.

Here are some factors that can affect the cost of short-term rental insurance: