Essential Guide to Short-Term Rental Insurance 2024: Protecting Your Property and Guests

Whether you rent properties full-time or just do it to make a bit of side income, it’s essential to make sure you protect yourself, your guests, and your property.

Most homeowners insurance policies explicitly state that they do not cover “business use,” so they generally won’t cover damages that happen while guests are staying in your home. To make sure you’re covered at all times, a commercial short-term rental insurance policy is vital.

What Is Short-Term Rental Insurance?

Choosing the right policy starts with an understanding of the short-term rental insurance definition. Short-term rental insurance policies cover legal liabilities and many kinds of property damage while short-term rental guests are staying in your home. 

Short-term rental insurance like a policy from Safely is there to protect not only the homeowner, but the property manager and the guest, too. A rare win-win-win.

Commercial property policies can provide coverage for incidents such as fire, theft and natural disasters. Short-term rental insurance is still needed to cover the specific risks associated with Airbnb rentals. Fortunately, short-term rental insurance can be a cost-effective add on since options include only paying for occupied nights.

Why Not Just Get Insurance Through Vrbo or Airbnb?

If you’re new to property management, handling all the loose ends can be tough. So it’s no wonder that many hosts just opt for the insurance offered by the OTA they choose, like Airbnb’s AirCover or the Vrbo insurance that doesn’t offer anything near full coverage.

The coverage or guarantee offered through third-party booking sites is often incredibly limited. For example, VRBO has free insurance for hosts. That sounds great — until you realize it only covers liability in two scenarios:

• If one of your guests gets injured on your property
• If one of your guests damages another person’s property

It offers no protection if a guest damages your property. To make sure you’re covered (and your property is as well), it’s a better idea to secure short-term rental insurance through a third party like Safely. Safely has covered $100 billion in homeowner claims since 2015, protecting thousands of successful property managers along the way.

What Types of Damage Does Short-Term Rental Insurance Protect?

Before choosing a policy, you should always review it carefully to make sure it meets your needs. However, most policies cover these types of damages:

Injury to a Guest

If a guest is injured while staying at your property, you could possibly be on the hook for their injuries. When you have short-term rental insurance, you’ll be financially protected if one of your guests is hurt on your property.

Property Damage Caused by a Guest

When you have multiple parties booking short stays in your home, accidental property damage is bound to happen. If the home itself or your personal belongings in the home are damaged, your policy will reimburse you.

Your policy will also generally cover you if your guest damages someone else’s property. For example, if a guest hits a neighbor’s car and the neighbor sues you for damages, your policy will likely pay out.

Theft or Burglary

Most policies cover at least some types of theft or burglary. If a guest or an intruder steals something during the stay, your policy will typically reimburse you. That said, most policies have restrictions on reimbursements for theft, such as requiring a police report, so make sure you look at these carefully!

What Types of Damages are Not Covered by Short-Term Rental Insurance?

Short-term rental insurance is usually very broad. However, there are always exceptions, meaning it can’t cover you and your guests in every single situation. Here are some examples of damages that most short-term rental insurance policies won’t cover:

Flood and Earthquake Insurance

Your homeowners insurance policy likely has this same exclusion for weather related events. Most short-term rental insurance policies will not cover flood or earthquake damage. If there’s a good chance your property will be damaged by a flood or earthquake, it may be a good idea to purchase separate flood and/or earthquake insurance policies sold through your homeowners insurance company.

Damage to Your Guests’ Property

Your insurance policy covers damage to your property — not your guests’ property. If a guest’s belongings are damaged during the stay, their best course of action is to file a claim with their own homeowners insurance or renters’ insurance policy. 

Intentional Damage to Your Property by Your Guests

Most short-term rental insurance policies will not cover vandalism and other intentional damage by your guests, but Safely does! If this is a major concern, it’s worth talking to Safely or shopping for a policy that will reimburse you for deliberate damage.

General Wear and Tear

Every home—rental property or not—will have gradual damage over time. Wear and tear is a part of owning a home, so your policy is unlikely to reimburse you.

Loss of Income as a Result of Damage by a Guest

If your home is damaged by a guest, your policy will typically pay for repairs. However, having those repairs done takes time, and you won’t be able to rent out the home during that time. That can lead to lost income.

Most policies will not reimburse you for the income you lose as a result of damage. If your home sustains major damage, this income loss can be significant, so it might be worth purchasing an endorsement that adds loss-of-income coverage to your policy.

Always remember to read policy carefully (yes, even the fine print!) to understand where you’re protected and where you’re not. Remember: each policy is different and worth reviewing closely.

Some Kinds of Theft

In order to reduce the risk of insurance fraud, many short-term rental insurance providers will not cover the theft of certain possessions. For example, if you keep extremely valuable jewelry in your rental property and a guest steals it, your policy is unlikely to cover it. Learn more about preventing theft from a previous Safely blog post.

Protect Yourself and Achieve Peace of Mind With the Right Policy

As a rental host, you hope every booking will go seamlessly. But unfortunately, accidents and property damage are bound to happen sometimes. So if you’ve been asking yourself, “Do I need short-term rental insurance?” The answer is YES. With the right short-term rental insurance, you can be assured that you’ll be financially and legally protected from unexpected harm.

Safely takes pride in offering the best protection for short-term rentals and offering rigorous guest screening and comprehensive insurance coverage so that you can focus on growing revenue while reducing risk. Secure your short-term rental property with Safely’s commercial insurance coverage tailored for property managers like you. Click here to get a quote and ensure peace of mind for every stay.