Owning a short-term rental comes with the potential for an excellent income opportunity, but also has its own share of risks. Ensuring that your guests are safe is your top priority, and obtaining short term rental insurance will offer you peace of mind. In this comprehensive guide, we will assist you by covering the various types of short-term rental property damage insurance, as well as offer great tips on which type of coverage will work best for you.

What is Short-Term Rental Insurance?

Short term rental insurance is a focused insurance or coverage policy specifically designed to protect property owners from risks they encounter during the renting process. It will typically provide the policyholder with adequate coverage for liability claims and property damage, among other risks and hazards. Property damage protection also covers the host from losses that can happen due to damage caused by guests such as equipment breaking down, spills or stains, and other elements needing replacement.

Why do I Need Short-Term Rental Property Damage Insurance?

The short-term rental that you worked so hard to prepare for is an excellent source of income, and property damage insurance is the most important element in protecting this viable investment. It is rare that guests will damage your property, but accidents do happen on vacation and it’s up to you as the owner to have a plan for the unexpected.

Common Risks for Airbnb Hosts:

Here are some of the most common issues host face while renting out a property that is in a popular vacation area:

  • Intense damage to property
  • Intentional vandalism
  • Theft
  • Damage to property guests bring with them
  • Unpaid rental fees + dues
  • Any level of bodily injury

If any of these things happen to you and you are not properly covered, you could be facing significant costs and severe financial loss. If you need to repair or replace damaged items inside your vacation rental, it can get expensive quite quickly, and this will immediately affect your profit margin during your endeavor. Property damage insurance thankfully transfers the cost burden to your insurance provider, ensuring that you do not undergo unexpected out of pocket expenses. 

Here are some additional reasons to make sure you have adequate property insurance:

Safeguarding Your Property Value:

Your vacation rental property has cost you a significant amount of money and time spent planning, and it’s crucial to maintain its value. A fitting property damage insurance policy will help preserve the value of this property by covering the costs of repairs or replacements due to any damage that guests caused. When you can take care of damages quickly, you are maintaining an excellent rental experience for prospective guests and retaining your all-important long-term value.

Minimizing Disputes With Guests:

Disagreements between hosts and guests regarding property damage happen quite frequently and can often lead to negative publicity on review portals. When you have a proper property damage insurance policy in place, it helps minimize disputes by implementing a very clear process for guaranteeing a fair resolution. Some leading options such as Guesty’s allow you to claim and recover your losses without any involvement at all from the guests, which does an excellent job of getting rid of unwanted tension during a disagreement.

Security + Peace of Mind for Unforeseen Events: 

No matter how seriously you take your duties as a host, unforeseen events can sneak up on you. Accidents that you cannot control can wreak havoc on your vacation rentals’ good condition, and instantly change your income potential. Property damage insurance offers the ultimate peace of mind and allows you to be fully prepared for the unforeseen while also being poised to recover financially.

Meeting Your Preferred Platform’s Coverage Requirements:

Many of the top vacation rental platforms such as Airbnb have very clearly laid out insurance requirements for those who want to be hosts. Property damage insurance is often a mandatory requirement to have your property appear online and to be sure you are fully compliant. By possessing this necessary insurance coverage, you can list your vacation rental with confidence and let your calendar fill up for a very rewarding booking season.

Types of Coverage to Consider While Hosting:

There are various types of coverage on the market for protecting your short-term rental property. It’s best to become familiar with the coverage you already have, and then you can lay out what other options are available that could fit your property’s needs.

Damage Coverage Policies:

Each of the major online travel agencies such as Airbnb, VRBO, and Booking.com have their own specific policies and processes to take on the brunt of guest images in physical injury. Here’s a comprehensive breakdown of what each platform offers:

Airbnb’s AirCover for Hosts

This coverage for host comes standard with every listing and includes:

  • Guest identity verification
  • Reservation screening
  • $3M host damage protection
  • $3M host liability insurance 
  • A 24-hour comprehensive safety line 

Airbnb Host Damage Protection:

Airbnb’s host damage protection covers you for damage to your property by guests during their stay. Here are the elements it covers:

  • Damages to your home, furnishings, valuables, or belongings caused by guests or their invitees
  • Damage to parked cars, boats, or other vehicles caused by guests or their invitees
  • Extra cleaning costs such as professional carpet cleaning that come as unexpected
  • Lost income if you need to cancel confirmed Airbnb bookings due to damage caused by a guest (or their invitees)

Here are some occurrences this type of coverage does NOT cover:

  • Damage from normal wear and tear
  • Loss of currency
  • Loss due to weather incidents
  • Other exclusions apply 

Here’s the process: to file a reimbursement claim through AirCover the host will need to provide solid evidence such as photos, repair estimates, or receipts within 14 days of the guest’s official checkout. Once this request and evidence has been submitted, the guest still has a full 24 hours to pay. If the guest then declines or doesn’t respond, you then have 30 days from the time of the scheduled loss to begin the assistance process with Airbnb Support to solve the dispute.

Airbnb’s Host Liability Insurance:

Airbnb’s host liability insurance provides $1 million in available coverage if you are the legal responsible party for a guest’s unfortunate injury or excessive damage to their property during a stay. Covered events could include:

  • Bodily injury to a guest (or others)
  • Damage to or theft of a property belonging to a guest (or others)
  • Damage caused by a guest (or others) to common areas, like entrance lobbies and nearby properties

Host liability insurance unfortunately does not cover damage or injury resulting from a planned or intentional act. To begin the claims process you fill out a liability insurance intake form which is sent to a third-party insurer, we will take steps to resolve your claim according to the policy terms.

Guesty’s Damage Protection

Guesty’s and Guesty’s For Hosts users will now have additional options for coverage that is specifically for short term rental hosts and dedicated property managers. Guesty’s Damage Protection Offers full coverage for guest images across all short-term rental distribution channels. One of the benefits of this useful service is that you can make claims within the dedicated Guesty platform, and without any guest involvement. This allows you to avoid time-consuming claim disputes that lead to bad reviews. 

Within the damage protection feature tab in the Guesty For Hosts platform, you can simply choose the desired coverage plans depending on the value of your property and its contents. These plans range from $3,000 up to $20,000 per booking. There is no deductible, and the plans include additional coverage for damages such as the effects of cigarette smoke, structural damage, and professional bed bug removal. Once damage occurs, the final claim is simple, then 85% of these claims are even paid in full within just four days.

Liability Insurance:

Liability insurance is crucial for the ultimate protection for yourself against lawsuits or claims resulting from injuries or accidents that take place directly on your property. This coverage helps with the costs from medical care, damages if you were found responsible for a guest injury, and legal expenses. This will provide you with peace of mind and financial protection against unforeseen circumstances that will affect the quality of your guests’ stay. Some of the OTA’s including Airbnb go to the links to include some amount of Host Liability Coverage built into a reservation. Short term rental insurance is a vital component for protecting your valuable property. It provides greater financial security, lessens risk, and provides peace of mind for both anticipated and unexpected damages. Contact us today at the Alexander Agency of St Charles to assure that your short-term rental can remain consistently ready and fully covered. Don’t let any accidents affect your favorable standing, and find the policy that enables you to promptly check guests in with pride!