Insuring a Short Term Rental

15 Replies

I read on the forums all the time if you own a rental, in this case my example is a vacation rental, that is titled in your own name all you need is a landlord policy and an umbrella policy to be covered. While this sounds fine on paper and others may be doing this I can't seem to find the right insurance. I live in Maryland and my vacation rental is in Florida a state where many insurance companies may not care to partake in. 

I have a landlord policy on my VR but when I asked my agent about an umbrella policy he says I must include all of my personal assets back in Maryland , cars, homes, etc in the policy to get coverage in Florida. I already have an umbrella coverage on my personal assets and I just want it for my VR in Florida and he says all he can offer me is an additional premises liability policy to my existing policy. While this is fine for a typical long term rental this is inadequate coverage for a VR.

Today I got a quote from Prosper a company that specializes in VR insurance, but when you add wind coverage aka hurricane coverage the policy is 3 times my current landlord policy with wind coverage! 

So what is the correct way to insure my VR? Also it's probably time for a new agent.

Chuck Masters

    Great post.. Following

    Chai Xiong

      I use a broker, not an agent. They can pull from multiple companies instead if one. Find one in the area where your rental is located.

      There have been several threads on this subject in the last few weeks.  Scroll through a page or two of this forum and you'll find all you need to know.

      A landlord policy is not going to cover the business side of STRs.  You need a commercial policy like you'd get from Proper, and yes, it's more expensive.  You're a higher risk.

      But I'm not going to repeat what I've said extensively elsewhere.  

      what @Julie McCoy said. 

      When I was getting my first VR policy I called 48 different insurance providers and asked them 24300 stupid questions. Eventually I found 3 or 4 I thought were worth reading through the policies. 

      You've got 24299 more stupid questions to go! 

      @Chuck Masters

      Thanks,  this is an important issue for all of us running short-term rentals. 

      I spoke with someone at Proper Insurance who was extremely helpful in explaining the difference between traditional homeowners policies and the added "multi-renter" liability coverage provided by a specialized STR provider like Proper Insurance or CBIZ. I recommend that you start by speaking with agents at those two companies and see who can get give you the best quote “apples to apples.”

      Some of my more experienced colleagues like @J. Martin and @Al Williamson  may have some good insights too.

      Good luck! 

      Ethan Cooke

        Florida is unique due to the coast.  You will be better served by searching for an independent agent or broker who knows the local market and has access to the carriers that does business in Florida.  An out of town agent wouldn't work will in this case.  You can also try add your property in Florida to your Maryland umbrella policy.  Most carriers should allow it provided the underlying coverage is there.  Your MD agent can help you with that.

        @Chuck Masters , I use Foremost for coverage of my VR's with a $1M premises liability and there are no exclusions because of STR status. I do pay a small $79 VR fee but that is about it. Check them out, although I'm in California so not sure if they have different rules for Florida. Best of luck!

        Cheers!

        @Chuck Masters Check out Auto-Owners. They have consistently given me the best rate, beating out Proper. They also bundle the liability across properties so that's only incrementally more expensive for each additional property.

        @Chuck Masters I'm in Florida as are all my vacation rentals. I'm not saying what you have been told before is wrong, because I don't know your particular situation. But my understanding is (as has been explained to me by my insurance company and others) that umbrella policies do not cover you for liability from "commercial activity" just personal liability. Short-term rentals are considered commercial activity here in Florida at least. I agree with @Ethan Cooke that you may want to look into CBIZ or another company that offers commercial liability insurance for short term rentals. The way I have my insurance set up is I have my H06 policies (hazard, wind, etc for condos) through a local agent. I have liability on those and landlord coverage as well. In addition to that I have CBIZ for commercial liability. What I asked CBIZ to do is quote me just the commercial liability portion and to zero out the rest (wind, fire, etc) because I have that with someone else. Proper is very similar to CBIZ from what I've heard. It sounds like what is unaffordable with Proper and CBIZ is the regular parts of the insurance. You can definitely talk to the agent at those companies and see if you can just get the commercial liability part. You can still have the umbrella as well. Those are generally inexpensive from what I know. 

        We represent CBIZ as well as other local (Florida based) carriers that provide coverage for short term rental (STR) on a dwelling fire form. If the policy has a specific endorsement for STR it is expanding the usual coverage to cover the unique risk exposures that occur during a vacation rental.

        Umbrella policies can be written on a "premise-only" basis that will cover only one property within the property limits. If you own the property in a corporation or have multiple unrelated owners of an LLC we would normally provide a commercial liability policy at that point.

        Your best bet is to find an insurance agent that specializes in writing short term rental to help get the right coverage without overpaying. 

        I appreciate all of the great ideas. I'm surprised none of the insurance agents on BP haven't weighed in on this discussion. Several folks alluded to an umbrella policy or premises liability policy but they don't really cover STR under 30 day stays adequately. One scenario that is not covered say you allow pets in your STR and the STR guest is out walking their dog and that dog bites a neighbors child enough to warrant some sort of medical care. Now the parents of the child want to sue cause that is what everyone does these days so they sue the STR guest, if they can find them, but guess what they can find me and I'm the deep pocket investor (which I'm not) so they sue me cause without me that dog would have never been in the neighborhood to bite the child.

        On premises liability only cover what happens on the property the biting of the child if it happens down the street off property this is not covered. While the personal umbrella policy may cover my issue has been I live in one state and the STR is in another and I have not found anyone to sell me an umbrella policy without trying to sell me coverage I don't need or want.

        I assume a commercial liability policy is needed since it is a business but I had my agent tell me since it was titled in my name I couldn't get a commercial policy. Time for a new agent.....

        If any STR owners operating in Florida have some referrals to insurance agents/brokers that can help me out, let me know.

        Chuck Masters

          @Chuck Masters

          Proper or CBIZ. Only two markets in FL that properly write STR.

          I mean I’m sure Lloyd’s or Lexington would write something, but not affordable.

          Yes your agent is mistaken. By far most businesses in the US are in a personal name, so it sure would be odd that you cannot get it.

          The problem in you are between needs in FL. Most commercial agents don’t make a dime helping you because the premium is too low (usually need to be about $20k in premium), and most personal lines agents only know home and auto.

          You also hit the nail on the head why most rentals, not just STR’s are much better covered under a commercial policy.

          We sold our South Florida vacation rental earlier this year, but what I did for insurance was had a policy with Proper excluding wind and I got a separate wind policy with GeoVera. They don't sell direct so I went through Brown & Brown of Florida in WPB to get the wind coverage. This was still more expensive than our previous Citizens policy, but cheaper than buying the Proper insurance with wind coverage and we were still covered for having a STR by both insurers.

          @Chuck Masters You are absolutely right. In that scenario you would be better covered by a commercial liability policy that is not limited to the premises only. That is another reason to work with an agency experienced in writing STR coverage so they can help find solutions to the unique risks that each rental property has.

          You should be able to get a general liability in your name, most carriers don't require a business name. 

          @Angela Signore I am glad you are away from Citizens Insurance -- their underwriting guidelines do not allow for more than 4 rentals in a year. Great for renting to snow birds that stay for a while, bad for true short term rental though! 

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