Short-Term Rental Insurance (VRBO/AIRBNB)

Insurance is not the most exciting topic…. Lets be real… but is still an important aspect of owning a Short-term rental.

As a physician, you should insure your practice (medical malpractice), your income (disability insurance), your life (Life insurance), your property (home owners, earthquake, flood, STR) and insure some more (umbrella policy).

There are books written about all of the above various forms of insurance and The White Coat Investor devotes half of his blog to insurance. It is an important and complicated topic.

Today we will focus specifically on Short-Term Rental Insurance.

Is short-term rental insurance necessary?  Can I just use the Airbnb built in 1 million dollar policy?

Yes, short-term rental insurance would qualify as a must have.  The overall expense is manageable and the protection provided may prove invaluable.  Short-Term Rental insurance would be in addition to Airbnb’s policy. This additional insurance will allow you the ability to customize your short-term rental policy and cover more than Airbnb bookings.

I am a big believer in insurance. Disability insurance saved our finances and our home so I am an insurance advocate….  (See The Fall)

Now obviously, short-term rental insurance is not the same as disability insurance… but it is still very important to have a good policy. These policies can help prevent a serious loss and some even offer business income coverage.

What is short-term rental insurance?

Short-term rental insurance is a form of homeowners insurance that covers nightly rentals.  You can get these policies through your local insurance broker or through a national company like Proper insurance.

Our policy is through our local broker and is backed by Lloyd’s of London.

Proper Insurance

Proper Insurance is a national company that can provide policies in all 50 States.   They have developed a policy with Lloyd’s of London to cover the unique aspects of short-term rental properties.

Endorsed by VRBO

Proper Insurance describes their short-term rental policy as “ a Homeowner’s policy, a landlord policy and a business policy”…

This policy allows you to replace your Homeowner’s policy and Landlord policy with one policy.

Short-term rental properties are unique in that they have multiple functions: personal use, commercial short-term rental use, may be unoccupied and sometimes LTR use with greater than 30 day rentals. Therefore, it can be tricky finding a policy that covers all aspect of a short-rental property.

Proper Insurance in partnership Lloyd’s of London covers all aspects of a short-term rental property:

Building contents

Commercial Business Liability

Business Income coverage

Personal Liability

Liability extends beyond the property

$1,000,000 policy can double to $2,000,000 when you use a property as a primary residence

The policy provided by Proper Insurance is extensive and they developed a reputation for providing comprehensive Short-Term Rental property coverage.

If you are going to be active in Short-Term Rental investing please do yourself a favor and purchase adequate insurance.

Lloyd’s of London (a little random extra info)

Lloyd’s of London is one of the oldest continuously active “insurance companies” in the world. 

It was founded by Edward Lloyd in 1686 and initially began with Marine Insurance.  In 1871, the Lloyd’s Act created a corporate body governed by that act. 

Therefore, it is technically not an insurance company.  Lloyd’s of London (the corporation) oversees the Lloyd’s insurance marketplace where brokers and underwriters perform business.  Lloyd’s (the corporation) is responsible to ensure that all “syndicates” that back insurance policies remain financially sound.  Multiple syndicates can pool together to cover large policies.  For example, ten syndicates cover one policy decreasing their risk to 10% each….

In summary, it is a little complicated but the Lloyd’s of London has been around since 1686, pays its claims and is still active today.

Enjoy Your Journey to Financial Freedom