Does Homeowners Insurance Cover Vacation Rental Properties?

A spare room, vacation home, or mother-in-law’s quarters have become more than extra square footage; thanks to vacation rental platforms, welcoming paying guests into your home has become more normal than ever. While renting out your property can help you earn significant extra income, becoming a Vrbo or Airbnb host comes with its own set of risks and responsibilities. Ensuring your property is adequately protected requires an understanding of the gaps in standard policies and the need for specialized vacation rental coverage.?

So, when unexpected accidents or incidents occur involving your guests, you need an insurance policy that is more equipped to respond to those risks.

Let’s unpack an essential question for vacation rental owners: Does Homeowners insurance cover short-term rental properties? Learn about standard Homeowners insurance, its limitations, and why specialized vacation rental insurance is often the smarter choice. Understanding what protections you need to look for and how to find the right coverage for your property can help ensure a protected, profitable short-term rental business. ?

What is Homeowners Insurance?

Homeowners insurance is a safety net for residential property owners. At its core, Homeowners insurance covers the structure of your home, your personal belongings, your personal liability for accidents you may cause, and additional living expenses if your home becomes uninhabitable due to a covered loss. It’s designed to protect the place you call home—not necessarily an income-earning rental property.??

What Does Homeowners Insurance Cover and Not Cover??

A standard Homeowners insurance policy usually includes the following areas of coverage for your primary residence (where you live, sleep, and receive your mail):?

• Dwelling Protection: Pays to repair or rebuild your home after covered events like fire, wind, or hail. Typically, this amount is decided upon during the binding process with your sales agent. It’s common for insurance to be paid out based on “Actual Cash Value” meaning the amount you receive factors in depreciation like age, wear and tear, etc.?

• Personal Property: Covers your belongings inside the home, such as furniture or electronics during a covered loss.?

• Personal Liability Coverage: Protects you if someone is injured on your property or you injure someone personally while out and about (like running over someone’s toe at the grocery store with a cart) and the other party decides to sue you, an individual.?

• Additional Living Expenses: Covers temporary living costs if your primary home is uninhabitable during repairs.?

But what happens when you decide to rent your home to paying short-term vacationers and Airbnb guests? That’s when your property becomes a business in the eyes of insurance, and major gaps appear through the policy.??

Once you have an active listing on a booking platform and receive payment from guests, major loopholes for even standard coverages and claims that do not involve your guest can now easily be denied based on a commonly seen “business activity exclusion” within a Homeowners policy. Airbnb Host Emily Richer found this out the hard way when a tree fell on her short-term rental property causing $120,000 in damage that was ultimately denied by her insurer.?

Does Homeowners Insurance Cover Airbnbs, Vrbos, or Vacation Rentals??

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