The Difference Between Homeowner’s Insurance and Short-Term Rental Insurance

If you are operating your properties as short-term rentals, your homeowner’s policy won’t provide the protection you need. A long-term rental protection policy isn’t the right fit, either, though. Instead, you’ll likely need a short-term rental insurance plan. 

But with that in mind, what’s the difference between homeowner’s vs. short-term rental insurance? Here’s everything you need to know. 

Homeowners Insurance 101

A homeowner’s insurance policy is designed to protect your home and personal belongings against a range of risks. It will typically cover the dwelling itself, as well as your personal property, liability if someone gets hurt, and any additional living expenses if the property needs to be repaired and thus unable to house you for a set amount of time. 

What a homeowner’s insurance policy does not protect, however, is the guests who pay to stay there. Therein lies the most important distinction when it comes to homeowner’s vs. short-term rental insurance policies.

Short-Term Rental Insurance: Do You Need It?

A short-term rental insurance policy is specifically designed to cover the unique risks of renting your home (or other properties) to guests on a short-term basis. These policies protect against damage to your home or personal property caused by guests. They also offer liability protection in case any of them get injured while they’re staying there.

But that’s not all! One of the biggest perks of a short-term rental policy is that it will compensate you for loss of rental income if the property becomes uninhabitable due to a covered event, such as bed bug remediation. You may even be able to add protections against vandalism caused by your guests.. 

The Difference Between Homeowner’s and Vacation Rental Insurance

There are, in fact, several main differences between homeowner’s vs. short-term rental insurance, which involve the following: 

Coverage for Rental Activities

The biggest difference between the two types of policies is that a short-term rental plan will cover activities related to renting out your property on a short-term basis. Your homeowner’s insurance policy will not protect you against damage caused by guests, and it will not insulate you from liability if a guest gets hurt while staying at your home. That’s because these activities are considered business uses, not personal use. 

Homeowner’s policies are designed to provide protection when occupying or using your home for personal reasons. For example, if someone got hurt while you had them over for a barbecue, your homeowner’s policy would offer protection. However, if that person were paying to rent your home for a week, you’d have no coverage under the same agreement. 

Frequency and Duration of Coverage

A short-term rental insurance plan can cover both occasional and frequent rentals. Whether you rent out your home the majority of the year or only do so a few times during tourist season, you’ll be able to obtain a policy to protect your investment.

A homeowner’s insurance policy never provides protection for renters. Instead, it offers you coverage against damage and various incidents that may occur during the personal use of your home. Policies typically last one year, whereas short-term rental plans are more flexible. 

Why Homeowner’s Insurance Just Won’t Cut It

If you are using one or more properties as a short-term rental, you need the appropriate insurance. However, many homeowners are surprised to learn that their standard insurance policy doesn’t cover short-term rentals. Don’t wait until disaster strikes to think about protecting your investments. Seek out a short-term rental insurance policy immediately. 

The Risk of Not Having Coverage

There are many different scenarios where lacking a short-term rental insurance policy could leave you in a tough spot, such as: 

Guest Injuries

If someone gets hurt while renting your home, they are going to expect you and your insurance to cover their medical bills. Depending on the circumstances, they might even file a lawsuit. 

Your homeowner’s insurance policy won’t protect you if you are using your property for business purposes. A short-term rental plan will provide you with the peace of mind you need, as it can cover everything from medical bills to legal fees. 

Vandalism

Guests may steal or vandalize your property. A particularly rowdy group could even leave you facing tens of thousands of dollars in damages. If you don’t want to foot the bill by way of your own wallet, you need to have the right insurance policy.

Short-term rental coverage can protect you from theft, vandalism, and accidental property damage by your guest. All you’ll have to do is pay your deductible, provide proof via a police report, and your insurance company will handle the rest. 

Property Damage

If a guest accidentally starts a fire or causes other major damage, your homeowner’s policy won’t apply. You will be losing rental income and be forced to come out of pocket for repairs. Once again, a short-term rental policy can save the day. You just need to make sure you get a plan that fully protects your home, covering accidental and intentional damage. 

Loss of Rental Income 

If your property becomes uninhabitable due to damage, say from bed bug remediation, you could lose thousands of dollars in rental income. And that’s to say nothing of all of the expenses you’d have to cover if your insurance company denied your claim. Obtaining a short-term rental policy protects your revenue and keeps you from putting yourself in such a bad position. 

Protect Your Portfolios With Safely

That wraps up our breakdown of homeowner’s vs. short-term rental insurance. If you are operating your properties as short-term rentals, you need the appropriate policy. And fortunately, obtaining the coverage you need is quick and easy, thanks to Safely. 

Whether you are managing 40 vacation rentals or 400 of them, we can provide a policy that suits your needs. Request a custom quote today and rest easy the next time you rent out your properties.