STR insurance question

25 Replies

hey guys I'm about to make an offer on my first real estate investment. ill be using it as a str. im just curious what kind of insurance policys other are using. do I just get normal homeowners and then get some kind of STR policy ontop of that? or is there an insurance just for STR that I can get that would help avoid getting a normal homeowners policy. the house is also on the water in atlantic city new jersey so I will also need flood insurance.

any insight on this would help me alot thanks.

@Kyle Debiase many of the standard home owner insurance companies do not offer short term rental policies. They may cover part time STR, like renting a room while you live there, but not full time. Tell your insurance carrier exactly what the use of the property is to make sure you are covered. Using the property outside of your insurance terms can result in a claims denial. Short term rentals have the highest incidents of liability lawsuits (compared owner occupied or long term rental). That is why some carriers stay away from them.

As far as providers. I use American Modern. Others recommend Proper, but the quote I got from them was really expensive. My suggestion is work with an insurance agent that brokers multiple carriers and they can get multiple quotes. Get three quotes at least and compare what they have to offer. Make sure you have a decent amount of liability coverage. All those people cycling through can really increase risk in that area.

Normal homeowner's insurance is worthless, as you are running a business from the home.  If you have standard HO insurance and have a claim, they'll deny the claim.  You will need an overnight rental policy.  Do a google search for vacation home insurance.  This type of insurance covers lost income, replacement cost, and liability.  

CBIZ has a number of markets for STR insurance that they will shop for you.

Congratulations on your purchase!

@Kyle Debiase Hey Kyle STR owner and STR property manager here in Atlantic City. You need insurance specific to STR coverage to get your STR permit in Atlantic City. There are local ins. Companies that offer the coverage. Some claim you do not need it that is not correct you do. It's also 100% not commercial insurance. Call Izabella Warda from Heist Insurance agency. 609 736 7215. I use her as a broker and my actual STR ins company is Johnson & Johnson

@Kyle Debiase what @Paul Stewart is saying is 100% accurate. There are other items that the insurance co is likely going to ask for. 1) the rental listing 2) updated certifications 3) if it's a multifamily property and other units have long term tenants will likely ask for leases and renters insurance for the tenants

@Kyle Debiase there's a lot of good advice on this thread.  You will definitely need other SRT insurance.  There are a handful of carriers out there right now with more carriers adding endorsements to coverage SRT since they are becoming more popular.  As @John Underwood stated Proper, Foremost and CBIZ are some of the most popular.  There are others that have added endorsements onto their policies (I would check with a local independent agent in your state), but Travelers started offering coverage for SRT now too.  Just a heads up SRT insurance is going to cost more than standard homeowners insurance or a standard landlord policy.  Proper will be the most expensive carrier out there for SRT.  Your best bet is to call a local independent insurance carrier in your state to see the options.

@Kyle Debiase so r

I run 20 STR properties all over the city. The STR unit I own is located in back area of Bungalow Park. My property is a 2004 build and raised to fema specifics so I actually only pay like 370$ a year.. most people don't have the situation i have with flood ins due to year built and being built to Fema specifics

When I compared Proper vs. more traditional homeowner insurance policies that said they covered short-term rental activity...I found that they did not provide as much coverage as Proper.

Proper is more expensive, but I prefer more coverage than less.

Mike

@Kyle Debiase

Contact flood simple for the flood insurance. Keep in mind with a flood insurance policy you can’t cancel for any reason other then selling the property or the mortgages company says you don’t need it anymore(which won’t happen in AC.) so you can’t get a policy and shop around for cheaper. I am not sure about when the policy ends if you can change carriers or not but I know your stuck with that company for a year and flood insurance is expensive!!

Contact mike and bob from Atlantic insurance services. They do all my jersey insurance for all my properties and they're great people!! As for the STR I am not sure about that. I would speak with mike and an attorney for the best answer.

Hey @Kyle Debiase ! You will need STR insurance to run one in AC. You will need proof when you submit all of your documents for your rental permit. If you have any specific questions about the market in AC or want to get into the numbers let me know!

Flood insurance is a requirement for anything in AC if it isn't raised and you are mortgaging it. So I would get a homeowners policy that will have an STR inclusion & flood. Im here if you need anything else!