An In-depth Guide to Vacation Rental Insurance

In general, your homeowner’s insurance policy will not cover any activity that occurs from your rental business.

A vacation rental is an excellent way to earn some income on the side. However, like any other business investment, there are some risks that you should be aware. You must be prepared to handle these risks and take the required steps to defend yourself in case of the worst.

Vacation rental insurance is one of the best ways to protect your investments in order to ensure that your property, your belongings, and your guests remain safe from any unexpected events.

As a property owner, you are most likely wondering if you even need vacation rental insurance for your business. While vacation rental sites such as Airbnb do not make it mandatory for you to have insurance, it’s better to be safe than sorry.

The purpose of having vacation rental insurance is to help manage dire situations, mitigate significant financial loss, and reduce the risk of major legal liability. . It also ensures you remain on the safe side by securing your business. Because you are renting out your property, your primary homeowner’s insurance will not cover any damages sustained during this type of activity.  In general, your homeowner’s insurance policy will not cover any activity that occurs from your rental business.

For this post, let’s go through everything you need to know about vacation rental insurance.

What is vacation rental insurance?

A vacation rental (or short-term rental) refers to any property that is rented out for less than thirty days at a time. For these types of rentals, rates are calculated on a per nightly basis, rather than on a per weekly or monthly basis. 

Vacation rental insurance is a specialty type of coverage or endorsement that can be either be amended to your existing homeowner policy, or added separately and billed on a per nightly basis. It typically cover your assets when your property is rented on platforms such as Airbnb, VRBO, or through any other short-term rental website . 

While these policies are not mandatory, a homeowner would be reckless to forgo obtaining this type of insurance. Securing your valuable assets from any unexpected exposure is crucial. It is even more necessary to acquire the best possible vacation rental policy on the market.

Do I really need it?

The short answer to these questions would be a resounding yes. While vacation rental services such as Airbnb provide basic policy protection policy, there are several scenarios they do not cover for you.

For instance, the Airbnb Host Guarantee policy does not cover several things such as “theft of cash and securities (Ex: savings bonds, stock certificates) Damage from ordinary wear and tear. Bodily injury or property damage to guests or others (those may be covered by Host Protection Insurance).”

Another option is its Host Protection Insurance. This liability insurance is offered to Airbnb hosts worldwide. The policy may protect you with up to $1,000,000 in primary liability insurance. It could also cover your legal responsibilities for guest injuries, damages to your guest possessions, or damage to common rooms such as lobbies.

However, like any other policy, it has its terms, conditions, and exclusions. For example, it does not cover loss of income.

Furthermore, when it comes to the policies of the vacation rental service like Airbnb, the agreement is not in your name but the rental service. That means you won’t be able to go straight to the insurer when it comes to filing a claim.

You need to go through the channel. That can lead to severe slowdowns that complicate the process further, which is not ideal if you are attempting to be reimbursed for damages.

While the policies offered by these vacation rental platforms protect from minor problems, they are insufficient when it comes to dealing with more severe cases.

In essence, the basic policies offered by these services are not able to replace the more comprehensive coverages. Furthermore, keep in mind that a standard homeowner is not suitable for operating a vacation rental business.

Once you begin generating money with your short-term vacation rental, it is considered a business from a legal point of view.

Even if you decide to rent out your property sometimes, filing a claim in case of property damage may be complicated.

To ensure these issues are dealt with smoothly, consider acquiring an insurance policy specifically made for vacation rental owners.

What should your vacation rental insurance policy cover?

The scope of the insurance coverage you decide on for your vacation rental will vary depending on the property you have ownership over and where it’s located.

You must decide on your coverage as well. Insurance companies are known for trying to sell their customers the most expensive packages they have available, which is something you most likely don’t even need for your property. However, the basic packages they do offer may not provide enough coverage for your needs either.

Generally, there a three basic things that every vacation rental insurance policy should cover:

Property protection

While most guests are unlikely to go out of their way to damage your property, accidents can and will happen occasionally.

You need to ensure that your property and all of your belongings are protected by insurance, so your personal finances are not massively impacted as a result of an unexpected damages or repairs. 

Liability coverage

The insurance coverage you acquire should not only protect your property but should also eliminate the risk of liability in case a guest is injured or hurt while staying at your property.

If your guests ever do decide to sue you for an accident or an injury sustained while they stayed on your property, you will need liability insurance to cover the legal fees.

Loss of income

This part of the vacation rental insurance is usually overlooked by most people, even though it’s very significant. The insurance policy you purchase needs to provide coverage for potential loss of income, in case you are unable to rent out your property.  .

Additional coverages

There are several other things you should keep an eye out for when selecting your coverage. Homesharing requires trust, but there are going to be times when you deal with bad actors regardless of what you do to avoid them.

To prevent having to spend money replacing stolen items, make sure that your rental is insured against theft as well. Moreover, it may be sensible to pick a policy that covers things like bed bug infestations or other similar damages.

If the property you are renting out is located in a coastal area or other location prone to extreme weather conditions, it’s wise to take out insurance that covers damages caused by these weather-related conditions as well.

How much is the insurance policy?

The cost of your insurance policy is determined by the location of your rental, its property characteristics, and the type of coverage you choose. On average, you may need to pay two to three times more for your vacation rental insurance than your homeowner policy.

In addition, your insurance may cost even more if your property is located in a popular tourist destination such as Florida or California. If that’s the case, you’ll need to have the financial resources available to spend a high amount of money annually for your coverage.

Your vacation rental insurance costs all comes down to the following factors:

Deductible: The greater your deductible premiums, the lower your monthly cost shall be.

Property location: if your rental property is based in an area that attracts a lot of tourists, the cost of your insurance will climb.

Amenities: Amenities such as a fireplace, hot tub, golf cart, or swimming pool all increase the insurance cost because of higher potential liability risks.

Replacement costs: If your property is very expensive to repair, you will need a more expensive insurance policy.

Rental frequency: The frequency that you use your property as a short-term rental will increase your insurance costs.

Vacation rental insurance providers

With the continued rise of companies like Airbnb in the past decade, only some policies competently address the exposure found at vacation rental properties. It’s crucial to make sure that you are working with an industry leader in this particular space in order to ensure that you get the best coverage for your vacation rental.

Here are a couple of insurance providers that offer vacation rental insurance for homeowners.


Allstate is a popular insurance carrier that provides customers with the option to purchase insurance policies in buddies. For those interested in renting their places out, it provides a program called Host Advantage Home-Sharing insurance. It comes as an add-on for homeowners insurance and offers coverage from theft and damage. In the case of theft, the policy helps protect your belongings while your guests are renting out your property. As for damages, the policy provides coverage of up to $10,000 for each rental period. 


CBIZ is one of the top vacation rental insurance providers for homeowners. The insurance provider can cover all renter stays regardless of how those stays are booked. The insurance covers several types of properties such as single-family homes, condos, duplexes, and so forth.

The coverage from CBIZ includes:

●  Damage caused by guests

●  Backup of drains and sewers

●  Replacement cost for your property, its content, and additional structures

●  Medical expenses

●  Litigation costs


Nationwide is a well-known company that offers personal and business covers in every state in the U.S. The vacation rental insurance policy can also replace your existing homeowner's insurance if you decide to rent out your property frequently. However, if you are planning to rent out your property only on occasions, you can purchase an endorsement of your existing policy. By settling on multiple policies, Nationwide will consider you eligible for a discount.

Proper Insurance

Proper Insurance is another popular choice among homeowners, and it’s backed by Lloyd’s of London. Its property insurance policy can cover both commercial and personal use for your rental property. The solution the company offers represents a business policy, homeowner’s policy, and landlord policy. Plus, the coverage extends to vacation homes, condos, duplexes, cottages, apartments, cabins, townhouses, and much more.

Additionally, Proper Insurance allows you to make a tailor-made policy that suits your particular vacation rental home. The agents in the company assist you with getting the most comprehensive insurance for your property.

 With any annual policy like Proper's, there are significant savings when the homeowners selects a high deductible ($500 - $3,000).The underwriting of Proper's policy is solid, but the 365 days of commercial coverage is often overkill for many hosts.


RentalGuardians provides vacation rental insurance for both renters and property owners. The company provides coverage for both owners with a few properties and holiday resorts. Here are some of the things you can expect from RentalGuardian to offer you:

Accidental damage protection: It protects you against unintentional damages at your rental when you have guests staying there.

Liability coverage: Protects homeowners and their properties from liabilities caused by guests.

Travel protection: This insurance is directed at short-term rental guests. It covers costs that could occur from unexpected events that arise before or during the guest's stay at your property.


Safely is a new type of insurance provider that offers policies that can be purchased for individual bookings. This is convenient for owners who might not need full-scale insurance, because they don’t rent out their property full-time. The best part about Safely’s policy is that you can pass the cost on to the guest in the form of a non-refundable guest fee. The kicker: Safely offers comprehensive background checks for each reservation, so you can rest easy knowing your guests have been verified.

The biggest difference between Proper and Safely is that Safely only provides commercial insurance when there is a commercial rental, on a "per-night" basis, with coverage from $0 to $1,000,000.

Proper's policy is a combined annual personal and commercial homeowner's policy. This means the homeowner always has coverage for commercial rentals, whether there is anyone staying in the home or not.

With Safely, you'll get Airbnb and VRBO insurance and comprehensive guest screening attached to eachh reservation:

  • Instant coverage - Up to $1,000,000 of short-term rental liability protection for your property that is automatically attached to every reservation.
  • Guest screening - Comprehensive background check for every reservation, so you can prevent bad guests from harming your property.
  • Quick & Easy Claim Payments -  Submit your claim in 5 minutes and get paid in under 4 days!
  • Up to 3 Named Insured - Comprehensive coverage protects you, your guests and your property manager (if applicable).
  • Protection as low as $8 per night - No more damage deposits. Guest fee covers the entire cost.


Velocity is a company that has recently decided to expand its insurance policy offer for short-term rentals. The company covers short-term vacation rentals properties rented out frequently, along with second homes rented out occasionally. Thus, they can help with a homeowner's unique coverage needs.

One thing that separates Velocity from the rest is that they specialize in coastal insurance coverage for properties exposed to recurring natural disasters. The company also promises to provide the quickest and fairest coverage in the wake of any catastrophic damage. If you are a property owner that is planning to rent out in an area prone for these types of occurrences, Velocity may be the perfect choice for you.

Here are some of the coverages you can expect from Velocity:

●  Earthquakes

●  Fire

●  Hurricanes

●  Liability

●  Lightening

●  Theft

●  Wind damage

Velocity's most commonly covered losses tend to be frozen plumbing, hail, windstorms, water damage, fire and smoke, and theft. However, they do offer many other coverage options on their list, so you can include them in your policy if needed.


Vacation rental insurance has a crucial role in keeping your property safe from potential events in the future. While not necessary, having an insurance policy in place can secure you and your finances from sinking into the danger zone. Of course, there is more to setting up your property for rent on a vacation rental service like Airbnb. If you need help setting up your listing, check our services out and see how we can help you get started renting your property out.

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