Understanding Vacation Rental Insurance Coverage

Understanding Vacation Rental Insurance Coverage

More people are turning to real estate as an investment opportunity. Rental income can be a fantastic source of passive earnings. Vacation rentals in particular can be a profitable asset.

Even if you reside at the property part-time, it demands a specific insurance policy. Standard homeowners' insurance does not provide you with adequate protection.

This article covers the basics of vacation rental insurance coverage. Keep reading to find out how to get ample protection for you and your vacation property.

What Does Vacation Rental Insurance Cover?

There are many different types of vacation rental insurance policies. They often have varying levels of protection. However, there are a few basic categories that almost all policies cover for short-term rental properties.

One is property damage. This includes accidental harm caused by renters to the building or its contents. Vacation rental insurance coverage will pay for repairs or replacement.

Policies usually cover theft and burglary. They will reimburse property owners for losses that result from break-ins or vandalism.

Finally, most vacation insurance policies provide liability protection. If a vacation guest becomes injured while on the property, insurance will cover medical bills and legal expenses incurred by the property owner.

What Does Vacation Rental Insurance Not Cover?

One of the big areas that vacation rental insurance often does not cover is intentional acts that cause damage to the property or belongings in it. These costs are typically covered by security deposits. However, you may be able to find coverage that extends to this type of damage.

Vacation rental insurance also does not cover regular wear and tear on the property, even if the bulk of it is due to use by renters. For example, wear on hardwood floors due to foot traffic over the years is not covered by vacation rental policies.

As mentioned, most vacation rental insurance policies cover theft. However, there may be exclusions in the insurance plan. Common examples include expensive jewelry, artwork, and family heirlooms.

A Note on Booking Websites

If you rent out your vacation property through sites like Airbnb and or VRBO, they provide a basic level of insurance protection. It is important to know that it is very limited, both in terms of scope and coverage levels.

For instance, both companies provide up to one million dollars in liability coverage. This could be a drop in the bucket should a guest become seriously injured during a stay and allege negligence by the vacation property host.

Whether it involves liability or property damage, claims must be submitted to the companies' resolution centers. This can be precarious if the harm is even close to meeting one of their many exclusions. For these reasons, it is best to find a stand-alone vacation rental policy that ensures adequate protection.

Find Vacation Rental Insurance Coverage Today

Now that you understand the basics of vacation rental insurance coverage, you can determine the right policy for you. An experienced rental company can further advise you on the level of coverage appropriate for your location and unique financial needs.

PMI Annapolis is a full-service property management company. We offer a variety of services, including vacation rental management. Reach out to us today to schedule a free consultation.