short term insurance what are the must have items ?

Question

Hi BP community

I recently turn my long term rental 4bdrm 2 bath house in south Euclid into short term furnished house .

currently listing on Airbnb VRBO & Booking .

I have a standard insurance with state farm right now with 2 million liability policy .

I understand a STR policy is a needed but what is that exactly mean ?

what specific items you find necessary to add for a short term rental insurance and what is roughly the cost ?

thanks!

Itay

Lauren Kormylo · Answer

Short Term Rental insurance is a policy where the insurance company knows you are doing short term rentals, and agrees to cover you. STRs are considered more risky for an insurer than long term rentals. And much more risky than you living in your own house. The reason is that you will have a steady stream of guests who are unfamiliar with your house, and that can lead to more risk for injury and more damage to the property. If you only have your current standard homeowner's policy and an STR guest hurts themselves and sues you, or a guest accidentally starts a kitchen fire and destroys your kitchen or the entire house, your insurance company won't cover you at all. So you MUST have STR insurance.

STR insurance covers what your regular homeowner's policy covers, and then adds extras. If a guest injures themselves on your property and sues you, the insurance will protect you financially. If a guest steals items from your house or breaks or destroys something, insurance may cover that (depending on your policy and deductible). STR insurance may include coverage if you have bedbugs, they may pay for the cost of an exterminator and pay you lost rental income because of that, up to a certain amount. It may cover lost rental income if you have a water leak or fire or other major problem with the house and you can't rent it, up to a certain amount of money.

We can't say what it will cost you, because it varies widely because of the size of your house, the location, whether you have a fireplace or a pool or something else that would increase risk, and many other factors. You will have to request a quote from different companies.

Proper Insurance Co. is probably the most expensive, but it also has coverage for things that other companies don't have. Others are Foremost, and CBIZ. Many insurers who write regular homeowner's policies will now add STR insurance to your policy and those companies include Farmers, Allstate, American Family, USAA, and others.

So the first thing you should do is find out if your existing insurance company offers STR insurance. You may be able to add it through them easily and at a reasonable cost.

I use Proper Insurance Co. for my STR. Like @Jeremy Jareckyj suggests, in the case of a major event, I am covered for loss of income for about a year's worth of rent. I also have bedbug coverage.

John Underwood · Answer

Your policy needs to say that house is used for STR or they could deny a claim.

Joseph Sauer · Answer

John Underwood summed that up beautifully. And State Farm, at least in Indiana, does not insure STRs. We went through Proper Insurance (they specialize is STR Insurance), which also acts as our primary home insurance. You don't have to go this route, but it was easy and really the only other option around our area. You might have more options where you live

Ryan Rominger · Answer

Good move switching to an STR policy—it’s designed for short-term guests and covers things standard homeowner policies don’t, like guest liability, damage, and loss of income if something happens to the property. Look for coverage that includes property damage (from guests), liability (in case of injuries), and income protection.

Collin Hays · Answer

You are effectively operating a small hotel, and the insurance risks for this are much different than what a homeowner's policy or standard landlord's policy would cover. It would be like me buying motorcycle insurance, but I have a wreck in a car and expect the insurer to pay for it. They will not, because they were not insuring risk of wrecking a car - only a motorcycle.

As such, insurance specific to overnight rentals is a niche line. There are not but a few insurers in this space, but it is growing all of the time since vacation rentals have become so popular. You want to make sure the insurance you buy covers the risks you are taking, before you accept your first guest.

Andrew Steffens · Answer

100% agree with the commentary above. You need an "STR policy" where the carrier knows you are renting nightly. Although you could likely satisfy lender requirements without doing this, if you ever make a claim you will likely be denied, which is essentially the same as paying for - and not having any coverage at all. I heard a story locally here in FL last summer where lightning struck a house and caused a fire. Luckily it was put out in time and although there was extensive damage it can be rebuilt and not a total loss. The house was vacant at the time (no guests) but the carrier investigated during the claim process and figured out the house was listed on Airbnb and denied the claim.

Tyler Divin · Answer

To add to what others have said, you need to be open and honest with your agent or broker about the specifics of the house, amenities, and any specific risks. If you're going to have a hot tub, tell them and make sure coverage is included. If you're going to allow dogs make sure guests dogs are covered and be aware of breed restrictions and then sync your house rules to the breed restrictions.

Michael Baum · Answer

Hey @Itay Heled, @Lauren Kormylo provided a great overview of what you need.

Proper is who we use for our STR insurance. It is expensive but comprehensive. Covers everything like loss of revenue due to damage, coverage for guests away from the house and so on.

We are lake front so we have a rider for the beach and I added a dock rider even though we don't have a dock. It was cheap.

Plus a umbrella policy over all of it.

Jacob Morgenstern · Answer

Check out Steadily. I use them for all of my policies. They specialize in vacation rentals and they are affordable compared to others in this industry.

Jeremy Jareckyj · Answer

on my STR policies -

I make sure the personal items cover all the belongings of the STR.

I also typically do a loss of use value of what I anticipate rents would be for the entire year.

short term insurance what are the must have items ?

short term insurance what are the must have items ?

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