Short-Term Rental Insurance for Home-Sharing, Airbnbs and Vrbo

Short-term rentals, also called vacation rentals, have risen in popularity as alternatives to traditional hotels over the last decade, especially with the rise of vacation rental websites like Airbnb and Vrbo. However, ensuring you get the right damage and liability coverage as a short-term rental property owner can be a struggle, as homeowners insurance typically excludes coverage and the coverage included with some certain rental platforms may be insufficient.

Keep reading to learn more about short-term rental insurance, what it covers and where to get it.

On This Page

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  What Is Short-Term Rental Insurance?

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  How Does Short-Term Rental Insurance Work?

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  What Does Short-Term Rental Insurance Cover?

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  How Much Does Short-Term Rental Insurance Cost?

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  How To Get Short-Term Rental Insurance

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  FAQs

What Is Short-Term Rental Insurance?

Short-term rental insurance, sometimes called home-sharing insurance, helps cover your property alongside liability coverage for damage or injury caused by paying guests who rent from you for a short duration. For example, if a paying guest were to sue you because they were injured during their stay or if they damaged or stole your property, your short-term rental insurance can offer some financial protection for your losses.

Who Needs Short-Term Rental Insurance?

Someone who rents out their home or property to people who are vacationing or traveling for short stays should consider short-term rental insurance to protect themselves from costs their guests may incur.

In addition, short-term rental insurance may be required by law. For example, in Massachusetts and Hawaii, rental hosts must meet certain liability insurance requirements before they can start business.^[1][2]

If you rent your home from another landlord or property owner, you may be able to sublease it and may want to consider short-term rental insurance. Keep in mind, many landlords don’t permit subleasing and you’ll need to check the terms of your rental agreement before considering becoming a short-term rental host.

How Does Short-Term Rental Insurance Work?

Earning income from your short-term rental qualifies as commercial activity and any losses incurred during a guest’s stay would likely be excluded from homeowners insurance coverage. For your short-term rental to qualify as a business, you'll generally need to earn at least $2,001 over the policy period but some insurers may increase the income threshold to as high as $15,001.^[3]

Insurance companies often offer short-term rental coverage as a rider to your existing homeowners insurance, but others may only offer it as a separate policy. How much space is covered will depend on what you determine with your insurer, so you can still receive coverage whether you’re renting out a whole house or only a single room.

Short-term rental insurance is ideal for anyone renting out part of their property for up to one month, but the exact amount of time that qualifies as a short-term rental can vary depending on the insurance policy and the property’s location.^[4] For example, those who rent out their homes for 63 days or more will not qualify for short-term rental coverage from American Family Insurance.^[5]

What Does Short-Term Rental Insurance Cover?

The specifics of what a short-term rental home insurance policy will cover will vary between insurance providers, but generally can provide the below types of coverage. Keep in mind that some policies will not include all the below coverages or certain ones may be available for an added cost.

• Guest liability coverage: If a guest is injured while staying on your property, you should be covered. Your insurance would also cover you if you were found at fault for the injury and the guest decided to sue.
• Dwelling coverage: You would receive coverage for repairs if a guest damages the covered property. You should also be covered under any covered perils in your policy, such as if a tree fell on your guest house or wildfire.
• Personal property coverage: If your personal property within the covered space is stolen or damaged, your insurance should cover its repair or replacement after you pay your deductible.
• Loss of income: Similar to how loss of use coverage in a homeowners insurance policy covers you when you can’t use your home, your lost rental income may be covered if your covered property is damaged and can’t be rented out. Your insurer may also cover lost income due to a guest failing to provide payment for their stay.

What Isn’t Covered?

Short-term rental insurance policies typically exclude the following:

• Intentional damage: If someone renting your property intentionally damages it, you are unlikely to receive coverage. Instead, you may need to sue the short-term tenant directly in order to get compensation for the damages.
• Your guest’s property: Your short-term rental policy won’t cover any damages to their property while renting from you and they would need to seek coverage on their own.
• Maintenance or wear and tear: General repairs that are necessary over time such as some leaky roofs, typically won’t be covered.
• Floods and earthquakes: Similar to homeowners insurance, many natural disasters including earthquakes and floods, aren’t covered by these policies. Instead, you will generally need to buy coverage separately.
• Select items: Some insurers may exclude coverage for items like jewelry and cash. You should either secure these items in a secure safety deposit box or safely store them elsewhere while tenants are living inside your home.

Short-term rental insurance explicitly covers damage and liability exposure for paying guests and won’t cover friends or family staying with you for free. Instead, personal stays would generally be covered by your existing homeowners insurance policy.

How Much Does Short-Term Rental Insurance Cost?

The premium for a short-term rental insurance policy will vary, but generally, the same rules apply when determining the costs for homeowners insurance, such as how close it is to nearby fire departments, whether the area is high-risk and if you have certain amenities like a pool. That said, this coverage can be relatively affordable if purchased as an add-on to your existing homeowners insurance policy instead of as a standalone commercial policy. For example, the cost can start as low as $40 per year to add home-sharing coverage to a homeowners insurance policy from Erie Insurance.^[6]

Short-term rental insurance can be more expensive than homeowners insurance due to the higher risk from multiple short-term guests who may be less inclined to reduce reckless behavior while they are on vacation. Some insurers offer the option to pay for coverage only on days when guests stay, which can reduce costs, especially if you rent out your property only during certain seasons.

How To Get Short-Term Rental Insurance

Many insurance companies offer short-term rental insurance as standalone policies or riders to an existing homeowners policy. Here are a few examples of insurance that could help cover your short-term rental.^{[7][6][8][9][5]}

Do Airbnb or Vrbo Offer Short-Term Rental Coverage?

You can often get coverage for short-term rentals through platforms that facilitate rentals, like Airbnb and Vrbo. This coverage is automatically included when hosting through these services.

Airbnb’s AirCover package offers liability coverage up to $1 million, which includes injury and theft or damages caused to a guest’s property. The liability coverage also extends to any damage they may cause to common areas, like a lobby or pool in a condominium. It also offers up to $3 million in damage protection to your personal property and belongings.^[10] Meanwhile, Vrbo liability insurance offers up to $1 million in protection if the vacation rental is made through its website.^[11]

Keep in mind, complimentary coverage options are not meant to replace traditional insurance, and you may need to purchase insurance to get more extensive coverage like protection for your personal belongings.