{"id":183653,"date":"2025-07-02T13:07:18","date_gmt":"2025-07-02T19:07:18","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=183653"},"modified":"2025-07-30T11:13:55","modified_gmt":"2025-07-30T17:13:55","slug":"you-might-have-property-insurance-but-is-the-rest-of-your-short-term-rental-protected","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/you-might-have-property-insurance-but-is-the-rest-of-your-short-term-rental-protected","title":{"rendered":"You Might Have Property Insurance, But is the Rest of Your Short-Term Rental Protected?"},"content":{"rendered":"\n

This article is presented by Proper Insurance<\/a>.<\/em><\/p>\n\n\n\n

It started with a leak.<\/span><\/p>\n\n\n\n

At first, it was just a mysterious puddle forming near the bathroom. The guest texted around 7:45 p.m. \u201cHey! Not a big deal, but there\u2019s some water on the floor. Maybe the humidity?\u201d<\/span><\/p>\n\n\n\n

A few hours later, it became less of a mystery. <\/span>The plumber would later <\/span>call<\/span> it<\/span> \u201c<\/span>a catastrophic misuse of modern plumbing.\u201d<\/span> Translation: The guest had flushed something down the toilet that no human being should ever attempt to flush. The working theory was either a loofah, underwear, or possibly both.<\/span><\/p>\n\n\n\n

By the time I arrived the next morning, the guest had fled, <\/span>the entire downstairs area was soaked<\/span>, and the main water shutoff valve appeared to have <\/span>been operated<\/span> with a crowbar in a state of panic. <\/span>The final repair bill, including drywall, subfloor, and the cursed pipe <\/span>itself<\/span>, was just under $9,000.<\/span> The business revenue I would lose <\/span>over the course of<\/span> the rebuild period was another story, surpassing $16,000 at my property in just one month of peak season.<\/span><\/p>\n\n\n\n

So I did what any responsible <\/span>short-term rental<\/span><\/a> operator would do: I called my insurance company, explained the situation, and waited for the words: \u201cYou\u2019re covered.\u201d<\/span><\/p>\n\n\n\n

Instead, I got: \u201cOh\u2026 was this a paying guest? Like from Airbnb?\u201d<\/span><\/p>\n\n\n\n

And that, friends, is when I realized I had been paying for insurance, but it didn\u2019t <\/span>actually<\/span> include the coverage I needed for my short-term rental business. <\/span>As far as Airbnb\u2019s AirCover goes, <\/span>it turns out<\/span> the marketing is <\/span>great<\/span>; the actual coverage<\/span>, however,<\/span> is completely hit-or-miss <\/span>for<\/span> what they decide to pay and a lack of urgency in communication.<\/span> I never made that mistake again once I found Proper Insurance, but I need to finish the story first.<\/span><\/p>\n\n\n\n

Property Insurance is Not Business Insurance<\/span><\/h2>\n\n\n\n

Most hosts think, \u201cI\u2019ve got insurance, so I\u2019m covered.\u201d <\/span>And <\/span>sure<\/span>, <\/span>your property <\/span>might<\/span> be insured<\/span> for personal or tenant use.<\/span> But does it include coverage for your short-term rental business? Not so much. I was one of them\u2014I found out the hard way.<\/span><\/p>\n\n\n\n

Traditional homeowners and landlord policies <\/span>are designed<\/span> for long-term tenants or owner-occupants. <\/span>They rarely cover <\/span>vacation rental<\/span> guest-related damage, often exclude or limit liability coverage, and typically offer little to no reimbursement for lost income, <\/span>especially<\/span> if the property is <\/span>being used<\/span> as an active income-generating business, such as a short-term rental.<\/span><\/p>\n\n\n\n

In my case, the insurer asked if the guest who reported the leak was \u201ca tenant on the lease.\u201d When I said it was an Airbnb guest, their tone changed. \u201cOh. That may not be covered.\u201d<\/span><\/p>\n\n\n\n

Spoiler alert:<\/span> It wasn\u2019t.<\/span><\/p>\n\n\n\n

Come to find out, every policy carries a \u201cproperty entrustment\u201d or \u201cdishonesty exclusion,\u201d meaning that when you hand your keys to a guest, traditional insurance coverage can be <\/span>completely<\/span> null and void. This policy language gives the insurer the right to deny a claim, even something you assume would be covered, like guest-caused water damage.<\/span><\/p>\n\n\n\n

When trying to contact Airbnb\u2019s AirCover for support, the communication was challenging, to <\/span>say the least<\/span>. My claim kept making its way through the inboxes of multiple \u201cspecialists\u201d, with no real resolution offered. <\/span>This<\/span> ultimately cost me time, money, and my sanity.<\/span><\/p>\n\n\n\n

Common Short-Term Rental Insurance Mistakes<\/span><\/h2>\n\n\n\n

Your Airbnb isn\u2019t just a house with cute pillows and a clever guestbook. It\u2019s a business with a rotating door of new guests on a weekly, sometimes daily basis. <\/span>You\u2019re generating active income, managing expenses, and offering a hospitality experience, whether you <\/span>see<\/span> it <\/span>that way<\/span> or not.<\/span> And like any business, you\u2019ve got something that can bring the whole operation to a screeching halt: exposure.<\/span><\/p>\n\n\n\n

You\u2019re one guest accident, one electrical short, or one plumbing disaster away from severe damage, both physically and financially. Maybe it\u2019s a group of teenagers that head out for a midnight swim at your lakefront property, not thinking they should bring life preservers down to the dock. Perhaps it\u2019s a bachelor party that turns the fire pit into a science experiment. Or maybe it\u2019s something simple, like a guest slipping on wet tile and claiming there were no bath mats in sight. <\/span><\/p>\n\n\n\n

These are not rare events. They\u2019re the kind of things that happen every week across thousands of short-term rentals and the unfortunate scenarios that traditional homeowners and landlord policies <\/span>were never designed<\/span> to handle.<\/span><\/p>\n\n\n\n

It\u2019s not that hosts are careless. Most are doing their best to cover the basics. <\/span>They pay for some <\/span>kind of<\/span> insurance that the trustworthy local agent told them was a <\/span>good<\/span> price and should work for short-term renting.<\/span> But insurance is complicated, and when you\u2019re busy managing bookings, guest messages, and turnovers, reading the fine print on your policy usually ends up at the bottom of the to-do list.<\/span><\/p>\n\n\n\n

This<\/span> is why short-term rental owners need coverage that aligns with their business operations,  not something built for long-term leases or supplemental protection stacked on top of the wrong base policy. You need insurance that understands your calendar is full, your guests are rotating constantly, and your property operates like a boutique hotel without a front desk.<\/span><\/p>\n\n\n\n

The Better Way: Insurance Designed for STRs<\/span><\/h2>\n\n\n\n

Proper Insurance<\/span><\/a> exists because short-term rentals carry far greater risk than a personal property or long-term rental. And the risk of something going wrong? It\u2019s not rare – it happens daily.<\/span><\/p>\n\n\n\n

Proper Insurance built a policy that completely replaced inadequate homeowners and landlord coverage, offering protection not just for the building, but the rest of your short-term rental business too:<\/span><\/p>\n\n\n\n