Renting out your vacation home is a great investment, but there are inherent risks that come with allowing strangers to stay at your property, including damage to furniture and appliances, slips that cause bodily injury, and guest fraud.
So there’s no question that specialized short-term rental (STR) insurance is a must. But understanding what that should cost and the coverage you should receive can be complicated when there are so many options on the market.
In this article, we explore:
- How much does short-term rental insurance cost?
- Factors that affect insurance costs
- How much vacation rental insurance can save hosts
- Reducing or eliminating the cost of vacation rental insurance
- Business benefits to short-term rental insurance
- Key takeaways
- Frequently asked questions about short-term rental insurance costs
Protect your business from costly damages with Safely’s short-term rental insurance.
How much does short-term rental insurance cost?
The average annual cost of short-term rental insurance ranges from $2,000 to $3,000. The cost is roughly two to three times that of standard homeowners’ policies, which usually don’t cover short-term rental damages.
Vacation homes are considered riskier than primary residences since there’s an increased chance of damages and accidents, but there are many other factors that go into determining your short-term rental premium, like the condition of the property, and its location—we look at these in the following section.
Factors that affect insurance costs
Just like your homeowners insurance, the cost of your short-term rental insurance will depend on multiple factors:
The location of your home: A property that’s close to a famous location for events like concerts will probably have higher costs because of its popularity and potential for risk.
The property type: An old property that’s more susceptible to damage (for example because of the condition of the window frames or fencing) will have a higher cost.
Also, facilities, such as fireplaces and swimming pools, could raise the risk of damage and injury to the renter on the site, so this may also incur greater prices.
Your service provider: Every insurance provider is different. It’s essential to get insurance quotes from each and understand the different coverage options they are offering you. You may also want to be mindful of how they charge you. Is it per month, per year, or per booking?
Safely only covers the days you have bookings, so you will only pay for when you have a reservation.
Extent of coverage: Some service providers might only cover on-site property damage for the homeowners; others may have different replacement costs.
Safely’s insurance policy covers on-site incidents for the homeowners, property managers, and guests. It allows you to claim replacement costs of up to $ 1,000,000 for structural damage or bodily harm.
How much vacation rental insurance can save hosts
Homeowners insurance won’t normally pay out when the property is used for commercial purposes (so that excludes your vacation rental). Also, the coverage you receive from online travel agencies (OTAs) like Airbnb and Vrbo isn’t from a specialist insurance provider, so can result in drawn-out claims processes that require the guest to accept responsibility.
And if you rely on, say, a $500 security deposit, the protection is clearly very limited—fine if you just need to replace some broken dishes, but nowhere near enough if your oven or refrigerator gets seriously damaged. And if someone has a poolside slip, the costs and stress could make that security deposit look minuscule.
This is where short-term rental insurance is a lifesaver. With a solution like Safely, you’ll be able to claim up to $1,000,000 in liability coverage for structural property damage and bodily injury, and $10,000 for damaged contents.
Not only that, but since you can make those claims following a simple three-step process, you won’t have to worry about reaching out to your guest. You can just go ahead and make your claim without them even knowing about it—so your guest relationships and five-star reviews remain intact, too.
Reducing or eliminating the cost of vacation rental insurance
Here are two ways to cut back on your insurance spending:
Use pay-as-you-go insurance
Some insurance companies charge a flat rate, while others like Safely only charge you for nights you book out.
We recommend you look for an insurance platform that integrates with your property management system (PMS) so your protection automatically kicks in whenever you have a reservation—no time-consuming admin required.
Include the fee in the pricing
Especially if you have a pay-as-you-go solution, it’s easy to add on the cost of your short-term rental insurance to your nightly rate, or to the add-on service fee, which includes cleaning and maintenance costs. If you do either of these, you can even generate additional income on the cost of the insurance.
As a result, vacation rental insurance can essentially pay for itself.
Business benefits to short-term rental insurance
Short-term vacation rental insurance not only offers the comprehensive coverage you need for an STR business but, as we’ve seen, you can add the fee to your nightly rate plus a small markup to increase your overall profitability.
Also, at Safely we have a record of fast payouts, with most claims resolved within five days. So when damages do occur, you can quickly recover the cost of maintenance and replacement.
As one customer said: “The claims process is insanely simple to go through, especially compared to other industry companies in vacation rentals. It’s also a really, really powerful thing when you can make a claim on something that isn’t necessarily accidental.”
Summing up the cost of short-term rental insurance
If you have a short-term rental property, you’ll need short-term rental insurance to protect you since your homeowner’s insurance doesn’t cover excess damage made by guests.
The cost of your short-term rental insurance will depend on multiple factors such as location, property type, service provider, and extent of coverage, with a typical policy totaling fees from $2,000 to $3,000 per year.
However, with Safely, you pay as you go—so you don’t pay anything unless you have a reservation.
We process most claims within five days, offering up to $1,000,000 in liability coverage, with the homeowner, property manager, and guests named and protected for every stay.
Protect your business from costly damages with Safely’s short-term rental insurance.
Frequently asked questions about short-term rental insurance costs
What are the benefits of short-term rental insurance?
If you have a second rental home, your existing homeowner policy probably won’t cover a slip and fall, theft, or a broken window. Additionally, large commercial claims on your homeowner policy can negatively impact future premiums which will leave you paying more. Short-term rental insurance like Safely’s will cover you and the renter in case any damage to the property or person occurs.
What does the insurance cover?
Safely’s comprehensive insurance policy covers on-site incidents, including property contents, structural property damage, and personal injury—for the homeowner, the property manager, and guests. It covers property theft, structural damage to your property, and bodily harm.
What type of insurance do I need for a vacation rental property?
Most homeowner insurance policies don’t cover you when your property is used for commercial purposes, so you need short-term rental insurance to protect all parties for a vacation rental stay.
How much does short-term rental insurance cost?
The average annual cost of short-term rental insurance ranges from $2,000 to $3,000. The cost is roughly two to three times the cost of standard homeowners’ policies, which usually don’t cover short-term rental damages.
What factors affect the cost of STR insurance?
The price of short-term rental insurance will depend on multiple factors such as where your property is located, the age of the property, and your service provider.
