NC - Insurance for LTR that will then be used as an STR

Insurance
4yFollow

NC - Insurance for LTR that will then be used as an STR

Zach Sprau
Specialist · Boone, NC · Member since 2019 · 7 posts · 0 votes

Hello, 

Hoping to get some suggestions on rental property insurance. We are getting ready to rent out our property in North Carolina so we need to change from our homeowners insurance to rental property insurance (that includes replacement/rebuild coverage on the property). 

We will be entering a long term lease with a small LLC who will then AirBnB out the property. We will have a LTR agreement with the LLC (that includes a provision for STR), and then the LLC will rent it out as a STR. Our current homeowners insurance provider does not have a product that will cover us for this situation, and the broker they referred us to seemed to be a bit stumped as well, but they are looking into it.

Does anyone have experience with this or have any suggestions for insurance companies/products in NC that would cover us for this situation?

Furthermore, what type of insurance should require the LLC to have? We've been told that for our specific property we should require them to have $100k of insurance (outside of what AirBnB provides) and that we should be listed as an interested party on the policy so we would be notified of any changes.

Thanks! 

Zach


0Reply
60 views

Most Popular Reply

Rod HanksBusiness Member
Insurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
4y
Quote from @Zach Sprau:

Hello, 

Hoping to get some suggestions on rental property insurance. We are getting ready to rent out our property in North Carolina so we need to change from our homeowners insurance to rental property insurance (that includes replacement/rebuild coverage on the property). 

We will be entering a long term lease with a small LLC who will then AirBnB out the property. We will have a LTR agreement with the LLC (that includes a provision for STR), and then the LLC will rent it out as a STR. Our current homeowners insurance provider does not have a product that will cover us for this situation, and the broker they referred us to seemed to be a bit stumped as well, but they are looking into it.

Does anyone have experience with this or have any suggestions for insurance companies/products in NC that would cover us for this situation?

Furthermore, what type of insurance should require the LLC to have? We've been told that for our specific property we should require them to have $100k of insurance (outside of what AirBnB provides) and that we should be listed as an interested party on the policy so we would be notified of any changes.

Thanks! 

Zach


Not sure why you would make it so complicated I’m assuming an attorney advised you to do it this way. But you would get a policy that has the STR endorsement in the name of the property owner and add the LLC that is running the STR as additional insured or additional interested party. I would suggest at least 1 million in liability.

Since you are setting it up this way I would also suggest you setup a separate general liability insurance policy for the LLC that is running the STR which would cover all STRs that it runs. So in essence there would be 2 polices, 1 for the owner of the STR and 1 for the LLC that is managing or running the STRs. 

we have access to a couple carriers that covers STRs and would love to help. 
Rod Hanks Insurance4.9155 Reviews
WebsiteView Page
1Reply
See this reply in the discussion

3 Replies

Jump to latestLatest
  • John Ellis
    Real Estate Broker · Asheville, NC · Member since 2022 · 9 posts · 7 votes
    4y

    I don't know if it helps but I went to GEICO for the homeowner's insurance on my place. It's two units and one is LTR, the other is STR. They were able to give me a great price on coverage. I know this is a little different than you were asking for but maybe it's close enough.

    0Reply
  • Rod HanksBusiness Member
    Insurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
    4y
    Quote from @Zach Sprau:

    Hello, 

    Hoping to get some suggestions on rental property insurance. We are getting ready to rent out our property in North Carolina so we need to change from our homeowners insurance to rental property insurance (that includes replacement/rebuild coverage on the property). 

    We will be entering a long term lease with a small LLC who will then AirBnB out the property. We will have a LTR agreement with the LLC (that includes a provision for STR), and then the LLC will rent it out as a STR. Our current homeowners insurance provider does not have a product that will cover us for this situation, and the broker they referred us to seemed to be a bit stumped as well, but they are looking into it.

    Does anyone have experience with this or have any suggestions for insurance companies/products in NC that would cover us for this situation?

    Furthermore, what type of insurance should require the LLC to have? We've been told that for our specific property we should require them to have $100k of insurance (outside of what AirBnB provides) and that we should be listed as an interested party on the policy so we would be notified of any changes.

    Thanks! 

    Zach


    Not sure why you would make it so complicated I’m assuming an attorney advised you to do it this way. But you would get a policy that has the STR endorsement in the name of the property owner and add the LLC that is running the STR as additional insured or additional interested party. I would suggest at least 1 million in liability.

    Since you are setting it up this way I would also suggest you setup a separate general liability insurance policy for the LLC that is running the STR which would cover all STRs that it runs. So in essence there would be 2 polices, 1 for the owner of the STR and 1 for the LLC that is managing or running the STRs. 

    we have access to a couple carriers that covers STRs and would love to help. 
    Rod Hanks Insurance4.9155 Reviews
    WebsiteView Page
    1Reply
  • Mitch Davidson
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    4y

    Hi @Zach Sprau. Do you own the LLC that's going to arbitrage the place? Or are you just LTR'ing the home to someone else that's going to STR it out? Either way, I would suggest reviewing what a typical STR policy from Proper or Foremost covers. I would make sure the STR policy covers a rebuild value that is sufficient in your estimation to rebuild the home, or that the policy is otherwise "100% rebuild." And I would insist on being named as an "additional insured," which will cause the insurer to notify you by mail when coverage lapses, renews, cancels, etc.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free