Short term rentals have become incredibly popular across Northern Michigan. From Traverse City waterfront homes to cozy cottages in Suttons Bay, many homeowners are using Airbnb and VRBO to generate extra income throughout the year.
But there’s one scary fact that many property owners overlook: Your standard homeowners insurance policy does not fully cover a short term rental or your liability exposures that increase when you rent out your home.
At Cardinal Insurance Group, we regularly talk with Northern Michigan homeowners who are surprised to learn there are major coverage gaps once a property is rented to guests.
Why Standard Homeowners Insurance Is Not Enough
Most homeowners policies are designed for personal residential use, not business activity or frequent guest turnover.
Once you begin renting your home, cottage, or lake property through Airbnb or VRBO, your insurance exposure changes significantly.
Depending on your policy, there are limitations related to:
- Property damage caused by guests
- Theft or vandalism
- Liability claims
- Loss of rental income
- Injuries occurring on the property
- Frequent occupancy changes
This is especially important in high-demand vacation markets like Traverse City, Suttons Bay, Glen Arbor, and along the Lake Michigan shoreline.
“Does Airbnb’s Coverage Protect Me?”
This is one of the most common questions we hear.
While Airbnb does offer certain host protections, many homeowners assume it replaces proper insurance coverage, and that can be a costly misunderstanding.
Airbnb’s programs inherently contain:
- Coverage limitations
- Exclusions
- Claim restrictions
- Delayed reimbursement processes
Any automatic coverage you receive from a house sharing vendor should never be viewed as a replacement for properly structuring your own home insurance coverage.
The Biggest Liability Risks for Northern Michigan Rental Owners
Northern Michigan properties often come with unique risks that increase liability exposure.
These often include:
- Waterfront access
- Docks and boats
- Fire pits
- Snow and ice hazards
- Hot tubs
- Recreational equipment
- Slippery decks or stairs
If a guest is injured during their stay, liability claims can become serious very quickly. Keep in mind that a guest using your home through a service has no relationship to you and therefore lawsuits are much more common than when a family member or friend stays overnight and is injured.
Don’t Overlook Local Regulations and Requirements
As short term rentals continue expanding throughout Traverse City and surrounding communities, many municipalities are also increasing oversight and regulations.
Some homeowners associations and local ordinances may stiuplate that your property cannot be rented by the week or weekend or allow rentals, but require:
- Additional liability limits
- Commercial endorsements
- Proof of proper insurance
- Specific occupancy disclosures
Having the right coverage can help protect both your property and your investment.
What Coverage Should Short Term Rental Owners Consider?
Every property is different, but common coverage considerations may include:
- Specialized short term rental endorsements
- Increased liability protection
- Umbrella insurance
- Loss of income coverage
- Water and sewer backup protection
- Seasonal or secondary home coverage
The right structure depends on:
- How often you rent thre property
- Whether you live there full time
- If you live in a part of the home while renting out a part
- The type of guests you host
- The features of the property
Why Local Insurance Guidance Matters
Short term rentals in Northern Michigan post different exposures from rentals in large urban areas.
Seasonal usage, weather exposure, waterfront risks, and tourism activity all create unique insurance considerations that you should be discussing with a qualified insurance advisor.
At Cardinal Insurance Group, we help Traverse City and Suttons Bay property owners understand where coverage gaps may exist and build protection that fits how the property is actually being used
If you own a vacation home, Airbnb, or seasonal rental property, reviewing your insurance before peak summer season is one of the smartest steps you can take. Remember, we are always here to help you make the best decisions to protect your family.
Cardinal Insurance Group Trusted Guidance. Personalized Service