Owning an investment property can be a great way to generate additional income, especially when renting it on a short-term basis. Companies like Airbnb and VRBO are now household names and have changed the way people travel. Maybe you have considered capitalizing on the vacation rental industry, but do you know what insurance coverage you need?
A dwelling policy covers a home that is rented to a tenant on a long-term basis. This type of policy won’t have coverage for damage resulting from short-term renters and lacks the higher liability limits that are needed for a vacation rental. What’s the difference? An insurance company assigns rates and coverages based on risk, and a dwelling policy is designed to cover the property for use by one individual or family over an extended period. The risk of damage to the property or injury to a renter significantly increases when a home is rented to different people on a daily or weekly basis. A policy designed specifically for vacation rentals includes property coverage and provides liability protection for the business aspects of owning the rental.
If a rental property isn’t insured correctly, the owner could be exposed to the possibility of denied property damage claims or even a lawsuit should a renter be injured on the premises. There is an insurance coverage for vacation rentals that can fit your needs, and that’s why it is important to consult an expert in the industry before purchasing coverage.