The unsurprising answer is yes; you need rental insurance for your property. The longer answer is that’s complicated. Let’s unpack the details.
Many owners will carry some form of homeowners insurance. But typically, it’s designed for owner-occupied property. There will be multiple stays; rental guests, the owner, and periods of being unoccupied.
The messy part of insurance is there’s no one size fits all solution. Each circumstance is unique. For some, your home policy may work fine, but other locations may need a rental rider.
As someone who has filed insurance claims in the past, it’s not a fast or straightforward process. No matter what the commercials say, insurance companies aren’t freely writing cheques.
Many carriers classify short-term rentals on Airbnb as a “business activity.” Therefore coverage endorsements may be limited, and your insurance carrier will likely deny any extensive damage claims.
Not running afoul of local licensing is another compounding problem for hosts. Many cities require a license to “legally” operate as a short term rental. In many cases, this license may include a cost or require proof of insurance.
The real cost of operating a short term rental isn’t so black and white. Airbnb’s Host Protection Insurance is an excellent step towards providing a coverage level; it’s not an insurance policy and will only cover specific damage.
Jump onto any STR message board, and for as many “amazing guest comments,” you’ll see a staggering number of horror stories. Hosts are experiencing what hotels have faced for years—walking into the unknown. Every single guest could either be the best or the worst. It’s better to be prepared for the worst rather than sorry later.
Monscierge has also put together two handy guides related to tax and incentives for STRs and boutique hotels.