Many people are now monetizing their properties by renting them to others using easily accessible services such as Airbnb or VRBO. But what many new to these services don’t realize is that the insurance needs for homes that are shared can be drastically different from those of a typical residential property.
When renting your residence to others, you should consider a Short Term Rental insurance policy. Not only will this policy protect your property, but it will also protect you should someone become injured while staying at your residence. Some things to consider regarding this type of insurance include the following:
- The first thing you should do when considering renting your property is to inform your mortgage company. You are legally required to obtain a “consent to let” authorization from the mortgage company. This is required because the mortgage company actually owns the property and they need to be comfortable with you renting it to others. Some lending companies may place you in a different mortgage program to account for the added risk. And some mortgage customers hesitate to discuss this with their lender as a result. But the fact of the matter is that it’s illegal to rent your property without first talking to your mortgage company.
- Likewise, you need to inform your Homeowner’s insurance company of your intention to rent. In most cases, you’ll need to switch from a residential home insurance policy to a Short Term Rental insurance policy. This coverage is also known as Vacation Rental insurance. Some confuse the difference between a Landlord insurance policy and a Vacation Rental insurance policy. The key difference is that a Landlord policy will provide coverage for “occasionally” renting your property whereas the Vacation Rental policy will provide coverage for “regularly” renting your property. If you purchase the wrong type of insurance policy, then you run the risk of your insurance carrier denying your claims.
- When shopping for Short Term Rental insurance, be sure to check whether your rental service provides any insurance offerings. Some of the more established services like VRBO and Airbnb offer some type of Host Protection insurance as a benefit to property owners. While not a replacement for the insurance that you should purchase on your own, it can certainly supplement your insurance and can help you decide how much insurance you need.
The best way to determine what type of Short Term Rental insurance you should purchase is to ask a licensed agent in our office. We can assist you with assessing your rental home insurance needs and provide you with some quotes from several of the top insurance companies.
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