Short-Term & Vacation Rental Discussions

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Lowell Bailey
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Short Term Rental Insurance

Lowell Bailey
Posted Oct 25 2022, 03:11

Hi All,

We are under contract to purchase a 2-unit home in Chittenden County. Our initial plan will be to rent the upstairs unit to longterm renters and to rent the bottom unit as an Airbnb. The upstairs tenants have agreed to run the housekeeping/turnovers of the STR. My question is on home owners insurance: Do we need any specific type of policy or can we pursue a standard homeowners policy? If the latter, are their ways to manage risk that are best practices in this situation? I have seen that Airbnb may offer some kind of owner policy. Has anyone used that? I've never been a landlord so this is all new to me. Thanks in advance for any/all advice!

-LB

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Anthony Catoni
  • Germany
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Anthony Catoni
  • Germany
Replied Oct 25 2022, 04:25

Hi LB,

I know for the airbnb side you will have to get either a rider on your renters policy or specific STR insurance. Homeowners policies will deny coverage if something where to happen and they find out the unit was used as a STR. I don't know how it would work with one side being STR and the other LTR, I'm following this thread for that info.

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Replied Oct 25 2022, 05:20

if you search on STR and insurance, you will find quite a few posts that may be able to help answer your questions. I just closed on my first STR yesterday and we did need specific STR insurance. As Anthony mentioned, your normal homeowners policy wont be sufficient.

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Dave Stokley
  • Rental Property Investor
  • Cleveland, OH
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Dave Stokley
  • Rental Property Investor
  • Cleveland, OH
Replied Oct 25 2022, 05:54

As @Trent Reeve mentioned this has been asked and answered many times in this forum: https://www.biggerpockets.com/...

For most of my own properties I have a standard landlord policy with a STR rider. On higher end places we and our clients might us a company called Safely, which offers coverage at a nightly rate for only those nights you have guests (think it's about $10-12/night). Their claim service is super easy, it covers the nice furnishings, and they pretty much pay claims no questions asked. Airbnb also offers AirCover for hosts which I wouldn't necessarily call insurance but it does offer some protection ($1m property + $1m liability). https://www.airbnb.com/aircove...

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John Underwood#4 All Forums Contributor
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John Underwood#4 All Forums Contributor
  • Investor
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Replied Oct 25 2022, 06:03

You need a commercial policy for the STR. I use Foremost. CBIZ and Proper are big players in this space.

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Joshua Messinger
  • Realtor
  • Poconos, PA
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Joshua Messinger
  • Realtor
  • Poconos, PA
Replied Oct 25 2022, 07:12

Hey @Lowell Bailey

I would recommend finding an insurance carrier that offers you an STR-specific insurance plan. Just using a regular insurance plan won't get you as covered on all ends as you should be. For example: If there is a maintenance issue causing the property to go vacant for a couple of days, the STR insurance plan will cover you for the vacant days you had. Whereas if you had the normal insurance plan there is no way you would get covered for something like this.

I hope this helps and please don't hesitate to reach out if you have any more questions! 

-

Josh

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Lowell Bailey
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Lowell Bailey
Replied Oct 25 2022, 07:59

Thanks to all of you for the input.  This is super helpful.  I will look into the policies and providers y'all mentioned. -LB

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Leslie Anne Morris
  • Real Estate Agent
  • Smoky Mountains, TN
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Leslie Anne Morris
  • Real Estate Agent
  • Smoky Mountains, TN
Replied Oct 25 2022, 08:39

I use Proper. Super comprehensive coverage and easy to work with. 

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Michael Baum#5 All Forums Contributor
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Michael Baum#5 All Forums Contributor
  • Olympia, WA
Replied Oct 26 2022, 14:40

I also use Proper. It would be comprehensive for both the STR and LTR. Add the umbrella. Commercial not personal.

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Lowell Bailey
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Lowell Bailey
Replied Nov 4 2022, 04:37

Hi All,

Thanks for the info on Proper.  I've talked with them and have a few policy options.  In consideration of due diligence, it would be nice to get at least two other quotes from other providers.  Does anyone else out there use other providers besides Proper for this type of thing?  Curious if anyone has experience with the following;

- Using a local broker/agency (our primary residence is insured with a local agency and I like working with the owner/broker).

- Big box national companies like Geico or Allstate?

Thanks for any and all input!

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Replied Nov 4 2022, 04:54
Quote from @Lowell Bailey:

Hi All,

Thanks for the info on Proper.  I've talked with them and have a few policy options.  In consideration of due diligence, it would be nice to get at least two other quotes from other providers.  Does anyone else out there use other providers besides Proper for this type of thing?  Curious if anyone has experience with the following;

- Using a local broker/agency (our primary residence is insured with a local agency and I like working with the owner/broker).

- Big box national companies like Geico or Allstate?

Thanks for any and all input!


 i think CBIZ and Foremost were mentioned. some big companies might also offer, just have to ask. 

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Michael Baum#5 All Forums Contributor
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Michael Baum#5 All Forums Contributor
  • Olympia, WA
Replied Nov 4 2022, 14:31

@Lowell Bailey, check with your current insurer. A lot of companies are now offering STR policies.

For example I contacted our agent and Pemco is offering STR insurance if you have primary policies. It was $1600 less for about the same coverage minus some specific coverages like bedbugs.

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Lowell Bailey
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Lowell Bailey
Replied Nov 6 2022, 02:35

Thanks All, that is good advice.  In the course of asking around, it does seem that there are a lot of companies in the market now.  I appreciate all of the input! 

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Lowell Bailey
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Lowell Bailey
Replied Nov 6 2022, 04:08

I thought I would throw out there the policy I got back from Travelers. I told the rep that I was going to have one longterm and one STR and he said no problem on the loss of income portion (as long as that loss is caused by damage and not just a voluntary or market-driven loss of occupancy). He said the policy will cover anything from smoke damage to fire and complete loss, whether it's caused by the longterm renters or the STR renters. Here's what the toplines look like on the policy quote. Curious what you all think? What would you change? What are some red flags? FYI, the appraisal pegs the replacement cost as $368k. I have a quote from a reputable off-site builder for $170-240 sq ft. new construction, which would translate to $340-$480k.

Coverage A - Dwelling Coverage Limit $ 301,000
Coverage B - Other Structure $ 30,100
Coverage C - Personal Property $ 20,000
Coverage D - Loss of Use $ 30,100
Coverage E - Liability $ 300,000
Coverage F - Medical Payments $ 2,000
Deductible $ 1,000

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Michael Baum#5 All Forums Contributor
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Michael Baum#5 All Forums Contributor
  • Olympia, WA
Replied Nov 8 2022, 12:01

So a couple of things @Lowell Bailey. Dwelling coverage is low IMHO. I would boost that to $300 psf. Liability is way to low as well. We have 1m in liability coverage. Medical coverage is inadequate as well. I think we have 50k. Personal property is also low, ours is 100k. Our loss of use is 50k.

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Lowell Bailey
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Lowell Bailey
Replied Nov 17 2022, 02:31
Quote from @Michael Baum:

So a couple of things @Lowell Bailey. Dwelling coverage is low IMHO. I would boost that to $300 psf. Liability is way to low as well. We have 1m in liability coverage. Medical coverage is inadequate as well. I think we have 50k. Personal property is also low, ours is 100k. Our loss of use is 50k.


 Thanks Michael,

These are all really helpful thoughts.  I will look in to the coverage suggestions you mentioned and see what that would do to the premium.

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Eliott Elias#2 All Forums Contributor
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Eliott Elias#2 All Forums Contributor
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Replied Nov 17 2022, 07:03

Get a STR policy, will cover guests trashing your place, vacancy if there are any repairs needed, furniture