Short-term rental insurance: what it is and who needs it

What is short-term rental insurance?

Short-term rental insurance is designed to cover your property and liability exposure when you rent out your home to a paying guest. For example, if a guest injures themselves and sues you, your short-term rental insurance’s liability coverage can help protect you financially. Short-term rental insurance is for short-usage cases, not year-round rentals to the same tenants. For the latter, you would need landlord insurance.

Typically, short-term rental insurance is only necessary if you have paying guests in your home; it does not apply to family members or friends who are staying with you for free. Most standard homeowners insurance policies will cover non-commercial guests who are visiting your residence.

How STR insurance works

Many home insurance companies offer short-term rental insurance as an endorsement (sometimes called a rider), meaning that the coverage is added to your current homeowners insurance policy. However, some companies may require that you obtain a separate policy to cover your short-term rental. Whether you are renting a room in your house or another structure on your property, this coverage can protect your assets in the event of an accident.

Depending on how your endorsement is written, you may be able to pay only for nights when guests stay at your property, not for continuous coverage. This can help reduce your costs if you plan on offering your property as a rental on a part-time basis.

How to get short-term rental insurance 

To obtain short-term rental insurance, you can check with your current home insurer to see if it offers a policy or endorsement. If you are unable to get coverage from your current carrier, explore other home insurance companies to compare prices and coverage. Engaging your insurance agent may also be beneficial in this process.

What does short-term rental insurance cover?

Exactly what’s covered by insurance for short-term rentals will vary, but in general, most policies include:

• Guest liability insurance: This is one of the core coverages of short-term rental insurance. It can help if a short-term, paying guest is injured on your rental property and you are found legally liable. 
• Theft and burglary: If you rent out your home on Airbnb, it’s likely that some of your personal belongings are there during a guest’s stay. If a guest steals something, you can file a claim with your short-term rental insurance provider to help cover the loss. 
• Personal property insurance: If a guest breaks or damages your home or personal belongings, you may be able to file a claim for that damage. 
• Loss of income: A bad storm, kitchen fire or other covered loss could make your home uninhabitable for guests. Loss of income coverage can reimburse you if you’re not able to rent out your home.  

Like a home insurance policy, you may be able to customize your short-term rental insurance. The add-on coverage types that are available could change depending on which company underwrites your policy, but common optional customizations include: 

• Excess use of utilities
• Flea and bed bug infestation
• Liquor liability
• Identity theft
• Squatter protection

What is not covered by short-term rental insurance?

Short-term rental insurance has some exclusions — especially the free or cheaper policies offered by Airbnb and Vrbo. For instance, Vrbo’s host insurance policy only includes liability insurance; the host’s personal property wouldn’t be covered. 

Some other common short-term rental policy exclusions are: 

• Flood: Like home insurance, short-term rental insurance won’t cover flood damage. You would need a flood insurance policy in order to be financially protected from a flood. 
• Earthquake: Similarly, damage from earth movement won’t be covered by short-term rental insurance. 
• Intentional damage: If a guest intentionally damages your property, it won’t be covered by your short-term rental insurance policy. 
• Wear and tear: If part of your rental property is damaged simply because it’s old and rundown — as opposed to being damaged by a covered policy peril — it won’t be covered by a short-term rental policy. 
• Guests’ property: You are not usually responsible for your guests’ property. If a guest damages their own belongings while on your rental property, that guest would need to rely on their own home, renters or condo insurance policy to cover the damage.
• Theft of valuable items: A short-term rental insurance policy may not cover the full value of some expensive items, like jewelry or artwork, if they are stolen by a paying guest. To fully protect these items, you may need to add a scheduled personal property endorsement to your home insurance policy.

Companies that offer insurance for short-term rentals

If you have decided to purchase a short-term rental policy, the first step is to compare quotes from different companies. Not only does this help you to get the best price, but it can also help you get the specific coverages that you want.

National and regional property insurers that offer short-term rental insurance include:

• Allstate: Allstate’s HostAdvantage home-sharing insurance offers a Merry Maids discount, with $25 off your first four cleanings.
• American Family: American Family offers short-term rental insurance for those who rent out their homes for less than 62 days per year.
• American Modern: American Modern offers STR insurance to homeowners who rent out their homes for less than three months per year. 
• CBIZ: With CBIZ’s standalone short-term rental insurance, you can rent out your home up to six months out of the year. 
• Erie: You can add a home-sharing endorsement to your Erie home insurance policy.
• Foremost: You can personalize your Foremost short-term rental policy with options like a landlord package, endorsements and your preferred settlement method for approved claims.
• Nationwide: For occasional short-term rentals, Nationwide offers an endorsement or rider to your existing homeowners or condo policy.
• Proper: With unique endorsements from Vrbo, Proper offers a four-in-one policy covering short-term rentals, personal use, occasionally unoccupied homes and long-term guests or tenants.
• USAA: Rental property insurance is available to USAA policyholders who rent out their homes for less than 30 days. 

How much does short-term rental insurance cost?

Several factors go into determining short-term rental premiums. The location of the property will play a significant role, as will the condition of your home. In general, most of the variables that impact homeowners insurance policy premiums will also affect a short-term rental policy.

These factors can include proximity to fire stations, crime rates in the area, your credit-based insurance score and the types of construction materials that were used to build your home. In general, renting your home (or a portion of it) is going to be viewed by insurance companies as a risk. Since insurance underwriting is based on risk, the premium that a company charges you will depend on the perceived risk of your specific rental situation.

Compare home insurance rates

If you’re shopping around for a new home insurance policy and know you’ll need a short-term rental endorsement, consider these providers:

Alternative options to protect your short-term rental

One alternative to short-term rental insurance you may consider is landlord insurance; however, this type of policy is usually designed for long-term rentals. Unless you plan to have the same tenants for an extended period of time and have them sign a lease, you may find that some insurance companies will not offer you a landlord insurance policy.

Another option is to consider finding an insurance policy that covers both your home and your short-term rental. This type of coverage streamlines the process and can potentially save you money since the coverage for the rental is likely coming from an endorsement rather than a separate policy.

AirCover for Airbnb hosts

If you rent your property through Airbnb, you are automatically enrolled in its AirCover protection program. It is made up of two coverage types: host liability insurance and host damage protection. The liability portion of the policy has a $1 million limit and can help if you’re legally responsible for:

• Guest bodily injury 
• Theft of guest property 
• Damage to common areas, like a building lobby, caused by a guest

Host damage protection has a $3 million limit and can help with these costs:

• Damage to your belongings caused by guests
• Damage to parked cars, boats and other vehicles caused by guests
• Extra cleaning costs for pet accidents, stains, smoke odor removal or unapproved guests
• Loss of income if the property is made uninhabitable by previous guests

Host damage protection coverage does not include property damage from environmental factors such as mold, damage or injury from intentional actions or loss of earnings. If you need to file a claim, you must first contact Airbnb, which then puts you in touch with a third-party claims administrator.

Vrbo liability insurance 

Vrbo’s insurance is not meant to be a standalone policy, as the platform’s listing requirements specify that owners need to have sufficient existing coverage. However, if you already are insured and a Vrbo guest files a claim, Vrbo’s liability insurance offers an additional $1 million in coverage to homeowners. 

Vrbo insurance may cover property damage claims when a traveler has caused damage to a third-party. However, this coverage does not provide protection for damage caused to your property, so it is important to have alternate coverage in place. Vrbo insurance may also provide coverage for traveler injury claims.

Homeowners listing their property as a short-term rental on Vrbo do not have to utilize this coverage, although rental reservations booked through the online Vrbo checkout system are automatically covered. Either way, rental owner fees do not increase with the service’s use. In the event of an incident, claims can be filed online.

Who should get short-term rental insurance?

If you have paying guests in your home, chances are you’ll need short-term rental insurance. Your home insurance policy won’t financially protect you when you use your home as a business (e.g., renting out all or part of your home for a short stay). 

Listing your home on Airbnb, Vrbo or a similar platform can be a nice way to earn some extra cash. But, it won’t be worth it if it leaves you financially vulnerable.

Frequently asked questions about short-term rental insurance

Methodology

Bankrate utilizes Quadrant Information Services to analyze November 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on married male and female homeowners with a clean claim history, good credit and the following coverage limits:

• Coverage A, Dwelling: $300,000
• Coverage B, Other Structures: $30,000
• Coverage C, Personal Property: $150,000
• Coverage D, Loss of Use: $60,000
• Coverage E, Liability: $500,000
• Coverage F, Medical Payments: $1,000

The homeowners also have a $1,000 deductible, a $500 hail deductible and a 2 percent hurricane deductible (or the next closest deductible amounts that are available) where separate deductibles apply. 

These are sample rates and should be used for comparative purposes only. Your quotes will differ.