Homeowners Insurance for Short Term Rentals
Hi, I am buying a house in Richmond Virginia that I plan on using as a second home/seasonal home. I will stay there about a week or two a year and list it for short term rental the rest of the year. I am trying to get homeowners insurance on the house, but many companies will not provide policies for a property for short term rentals. I know that sites like AirBnb and VRBO offer insurance that protects the host from incidents that happen during a rental, so is it necessary to get my own insurance to cover these rentals? Or could I get a policy that covers me potentially has the primary resident, assuming the rentals are covered by the renting company? This is my first RE investment so any advice is appreciated! Also could use recommendations for homeowners insurance companies that will cover short term rentals if that's the right move.
Good luck, Laura! Yes, you always need a homeowners policy. What company do you use now for insurance? You said this a second home. Try an independent agent not one of the giants.
Hey @Laura Morgan! Congrats on the properties, it sounds like you have a great plan. There are a few different insurance companies that have really taken a liking to short term rentals. The easiest one that is in most states is Proper Insurance. Here is a link to their site: https://www.proper.insure/
I’d highly recommend reaching out to a few independent insurance agents (I’m a bit biased because I am one) and work with them. Independent agents have a lot of flexibility and latitude to work with many different companies to get you the best coverage at the best rates.
@Laura Morgan - Proper Insurance, CBIZ and Foremost all offer STR insurance. We currently use Proper.
I would give Travelers a try too. I know in PA they now do the Airbnbs. Call a local agent that has them, don't call them directly as they do sell direct to consumers. Price is the same, but you get an agent that works with you. We are licensed in VA too, but for 2nd homes with short term exposure, I think a local independent agent will have more markets for you.
-
Insurance Agent
- Linwood Forest Insurance Group
I'd opt for Proper Insurance. We have a number of clients who use them, and we use them on our own duplex in Colorado Springs where we do Airbnb and short-term rentals in both sides. They have better coverage areas than most and know the finer points about short-term rental insurance. (Plus, they're underwritten by Lloyd's of London, which gives me some peace of mind.)
-
Real Estate Agent COLORADO (#FA100071747)
- 720-460-1770
- http://www.tiktok.com/@erinandjames_realestate
- [email protected]
Thanks @Ryan Ingram and @Justin! The quote I got from Proper insurance is more than twice what I was expecting to pay, and the quotes I was getting for a primary residence. Is that expected?
Foremost or USLI may be viable options as well. Would be glad to discuss
Originally posted by @Laura Morgan:
Hi, I am buying a house in Richmond Virginia that I plan on using as a second home/seasonal home. I will stay there about a week or two a year and list it for short term rental the rest of the year. I am trying to get homeowners insurance on the house, but many companies will not provide policies for a property for short term rentals. I know that sites like AirBnb and VRBO offer insurance that protects the host from incidents that happen during a rental, so is it necessary to get my own insurance to cover these rentals? Or could I get a policy that covers me potentially has the primary resident, assuming the rentals are covered by the renting company? This is my first RE investment so any advice is appreciated! Also could use recommendations for homeowners insurance companies that will cover short term rentals if that's the right move.
Be aware that Airbnb’s are currently illegal in Richmond but strides are being made to make them legal... sort of. Your proposed situation would not be legal under the tentative plan
“The proposed city rules would allow short-term rentals as a permissible accessory use in all city zoning districts that allow residential uses. All types of dwellings would be allowable under the rules, including accessory dwelling units, so long as such dwellings are the operator’s primary residence, meaning he or she lives there at least 185 days a year.”
In your coverage plan, make sure you are covered for Ordinance & Law, Code Upgrade, or Increased Cost of Construction. This is typically an option, not an inclusion. If it is included, check the coverage amount. It is typically 10% of the building amount, or, the "whichever is less" factor... When you see this, it's typically "5% of the building amount, or $10,000.00, whichever is less." $10,000.00 is NOT an adequate amount, for this coverage...When you have a loss, its not just the wall coverings that are affected. Whats behind the walls? Mechanicals, electrical, plumbing, etc... While you should be paid for all damaged components that exist, loss is assessed on the date of loss, for the items that exist, NOT what items may have to be upgraded, per your local building department in the repair process. Also keep in mind, this coverage is on an incurred basis, meaning, it's reimbursed. You have to actually spend it to get it. This can strain finances, to yourself, or the contractor you hire for the repair. Only more the reason you thoroughly vet any vendors you may employ...
Quote from @Laura Morgan:
Thanks @Ryan Ingram and @Justin! The quote I got from Proper insurance is more than twice what I was expecting to pay, and the quotes I was getting for a primary residence. Is that expected?
Mine went up to $8,500!