Over the last few years, short term rental(STR) properties have become extremely popular in and around Traverse City Michigan. Insuring them has become less costly than when they first began gaining popularity.
It’s important to know that you cannot insure a short term rental on most standard, unendorsed home insurance policies. Your home insurance policy was not designed to provide any landlord protections. In fact, a number of large claims involving the entire loss of a home over the past few years have been denied by insurance companies because the property was not owner-occupied at the time of the loss.
Traditional home insurance providers and policies are not written to cover vacation rentals, apartments, short term rental properties, cottages, guest homes, or even RVs.
For this reason, short term rentals need to be insured with a carrier that allows for incidental rental as an endorsement, or you will need to insure it on a completely different policy as a non-owner occupied residence or rental dwelling policy.
The premiums for insurance on short term rental properties depends on a number of factors including the number of months the home is rented, the amount of rental income it takes in, and of course any other exposures that you may rent out with the home, such as watercraft, e-bikes etc.
Allowing people to have access to not only your home, but to your hot tub, swimming pool, ATVs etc increases the liability exposure of these properties and the insurance will need to be endorsed or written accordingly.
There are now a number of insurance companies that specialize in vacation rentals with policies that provide property damage coverage, liability coverage for lawsuits that could arise out of the home’s usage, and even loss of use coverage that will reimburse an owner for loss of rental income when the home is not being used due to a covered loss/claim.
Most STR insurance policies will protect the home regardless if it’s being rented weekly or monthly. For more permanent occupancy like a tenant with an annual lease, landlord policies are also widely available.
The benefits of short term rental insurance are:
– It covers any damage or loss that occurs during the time of the lease.
– It pays for repairs to the rented premises and its contents.
– It pays for legal expenses incurred in defense of claims made by third parties.
If you are renting out your home, or any other property such as RV, swimming pool, cabin, or guest house, contact your independent agent and have a conversation regarding your rental to make sure that you are properly protected.