The Best Homeowners Insurance for Short-Term Rentals for 2024

Many people have started renting out their vacation homes or residences to people on platforms like Airbnb. These short-term rentals can bring in decent income, but you want to ensure you have the right coverage to protect your property. We have researched the industry to find the best home insurance companies for short-term rentals.

What is short-term rental insurance?

People who rent out their homes for short periods of time may not be covered by a typical homeowners insurance policy. Short-term rental insurance, also known as home-sharing insurance, is a policy designed for people who rent their property to others. It covers property damage and protection against liability.

Insurers consider renting out a home for short-term purposes a business. If a short-term guest slips and falls or accidentally causes a fire, a typical homeowners policy will not cover it. To cover this gap, you will need a home-sharing policy. Many insurers offer short-term rental insurance riders that can be added to an existing policy. Other insurers offer stand-alone policies.

Short-term rental insurance offers comprehensive protection that a homeowner's insurance may not provide. A comprehensive home-sharing policy will cover on-site incidents, including loss of or damage to property contents, structural property damage, and personal injury. Some may have additional coverage options.

Who needs short-term rental insurance?

Short-term rental insurance is not required if you have friends or family stay with you for free. It is also not required if you rent out your home as a long-term rental. Those will require landlord insurance, since a long-term lease is not considered a business. Short-term rental insurance is for homeowners who rent out a home, rental property, or vacation home to guests for short-term stays, such as through platforms like Airbnb and Vrbo. Home-sharing insurance can be critical in providing adequate protection. Even if you don't earn a lot from the rental income, insurers still consider it a business activity.

Airbnb provides hosts that use its services with $1 million in coverage in case a guest gets injured or their property is damaged or stolen. However, insurance offered by these platforms does not cover everything and the amount may not be enough. Even if covered by this insurance, homeowners should consider an additional short-term rental policy.

You may want to consider short-term rental insurance if you:

• Own rental property or a vacation home and rent it out to guests for stays less than 30 to 60 days. Many insurers consider a short-term rental to be a place rented out for 60 days or less.
• You rent out a spare bedroom or separate building on your property several times a month.
• You bring in over $2,000 a year in short-term rental income. Even if you rent out a place sporadically, most insurers define a business as any transaction that brings in over $2,000 of revenue a year.

What does short-term rental insurance cost?

The average annual cost of vacation rental insurance is $2,000 to $3,000 which is 10%-70% higher than the cost of a standard homeowners policy. Similar to a typical homeowners policy, the cost of a home-sharing policy will depend on factors such as the coverage amount, location of property, and deductible.

One factor that will impact a short-term rental policy but not a regular homeowners policy is the amount of business income you would want replaced if you were unable to rent out your place.

What does short-term rental insurance cover?

Just like a hotel requires a different type of insurance for its guests, if you rent out your properties for short-term stays, you want to ensure you are protected from common risks. Here are the main risks that short-term rental insurance covers:

• Liability: If a guest is injured on the property, short-term rental insurance can help cover medical bills and legal fees.
• Building and contents: If a guest steals or damages property, short-term rental insurance can help cover the losses up to the policy limits.
• Business income: If a home cannot be rented out due to a covered peril, a short-term rental policy can compensate the homeowner.
• Excessive utility usage: If a guest overuses the air conditioning or forgets to turn off the water, a short-term insurance policy may cover the extra utility costs.

Just like a homeowners policy, damage from floods and earthquakes is not included. Homeowners will need to consider getting additional coverage for flood or earthquake risk.

How to choose the best short-term rental insurance

Choosing the best policy depends on a variety of factors. Like any other homeowners insurance policy, the factors to consider are:

• The cost of policy or premium of the short-term rental policy or the additional rider to your existing policy
• Coverage amount and limit for damaged or stolen property and liability
• Deductible options and amount for a claim
• Strength and reputation of the insurer
• How easy is it to report claims

Here are the different coverage options available for a home-sharing policy:

• Depending on your existing homeowners policy, you can add a rider or endorsement to your existing policy
• Purchase a separate standalone short-term rental insurance policy
• Purchase a landlord insurance policy that covers short-term rentals
• Purchase a commercial property insurance policy

All of these options have their pros and cons. The key is to find the best policy for you and your situation. Compare coverage and cost for the different options. You may get a discount by bundling your auto and homeowners policy. If you are concerned about risks and want robust coverage, then a standalone policy may work for you.

You will need short-term rental insurance if you rent out your home, rental property, or vacation home on a short-term basis. A typical homeowners insurance policy does not cover business use of a house. It is important to get adequate coverage before you begin renting it out to short-term guests.

The data found on this page is a combination of publicly available quote data obtained directly from the carrier as well as insurance rate data from Quadrant Information Services. These rates were publicly sourced from the top ten (10) to fifteen (15) carrier markets, within each state, based on annual written premium and should be used for comparative purposes only -- your own quotes may be different.

Insurance products are then rated on a scale of one to five stars, primarily focusing on:

Pricing

With so many options for insurance across the board these days, it's easiest, and quite effective, to first look at the bottom line. Do single out competitive prices across insurance categories it's important to focus on:

• Deductibles
• Terms
• Coverage
• The fine print

Discounts

Insurance provides coverage for unexpected financial burdens and piece of mind. But it's important to check your policies and see how you can lower your premium. Insurance companies offer discounts for all sorts of things now from safety devices to good grades to automatic bill pay. Pay attention to:

• Discounts offered
• Variety of discounts
• Discount qualifications

Perks/Benefits

The benefits of insurance these days have gone far beyond just what your policy covers. Most companies and policies come with perks -- some of which may be completely unrelated to your insurance policy. Take a look at:

• Non-pricing related perks offered
• Benefits unrelated to your coverage
• Perks that stand out in the industry
• Will you actually use the benefit?

Customer Service/Claims Process

Policy research and coverage options are great, but how is the process when you have to actually use your insurance policy? The best coverage doesn't hold much value if it's a hassle to get paid out. Pay special attention to:

• How hard it is to file a claim
• If your provider has a history of resisting payouts
• The customer satisfaction scores for your provider