What type of policy you need to protect your vacation home depends on how often you’re there and how you use it. But no matter how you use your home, it’ll generally cost more to insure a second house than it does to insure a primary residence.
How to insure a vacation home you don’t rent out
Depending on your insurer, you may be able to add coverage for your second home onto your homeowners insurance policy for your first home or you may need to take out a second policy. Contact your insurance agent to find out if your current policy lets you add on coverage for a second home.
Keep in mind that most standard home insurance policies don’t cover homes that are unoccupied for more than a certain length of time — usually around 30 to 90 days. So it’s important to be up front with your insurer about how often you visit your vacation home and how much time you spend there in order to create a policy that fully covers the home.
You’ll also be expected to keep your vacation home maintained even when you aren’t visiting. You can do this by having the lawn mowed, collecting or forwarding the mail and checking in on the home regularly.
How to insure a vacation home you rent out occasionally
If you rent your home out on Airbnb a couple of times a year or occasionally let friends use it when you aren’t there, you may already be covered by a standard home insurance policy.
But each insurer has different guidelines for how often you can rent out your home, if at all, before you need a special insurance policy. So if you plan to rent your home out occasionally, talk with your insurer to find out how it will affect your coverage.
How to insure a vacation home you rent out regularly
A typical homeowners insurance policy won’t cover you if you regularly rent out your vacation home. This includes long-term or short-term rentals. Instead, you’ll need to take out a landlord insurance policy or a specialized short-term rental insurance policy to be effectively covered.
Short-term rental coverage. Also known as homeshare coverage, these options are specifically tailored to homeowners who rent their homes out on sites like Airbnb. Coverage is generally added on to an existing home insurance policy and can protect against things like theft, damage to your home from guests, bedbug infestations and more. Some policies also allow you to only pay for insuring your home on nights you’re booked.
Landlord insurance. These comprehensive standalone policies are designed for landlords who rent to long- and short-term tenants. If you tend to rent your home out for months at a time, this may be a more affordable option. Landlord insurance policies are often designed for professional use by full-time landlords and vacation home managers, but can also used by people renting out their homes part-time.Compared to short-term rental coverage, these policies will often have higher limits. For example, a short-term rental policy might only cover up to 12 weeks of lost earnings if your rental property is uninhabitable. A landlord insurance policy might cover up to 52 weeks, though specifics will vary by insurer.If you’ll be renting out your property for extended periods, landlord insurance is often preferable to short-term rental coverage.
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How do short-term rental insurance and landlord insurance work?
Think of these insurance types as extensions to your standard home insurance policy. They can offer coverage for:
Malicious and accidental damage caused by tenants and their guests
Theft by tenants and their guests
Loss of rental income if your property is left uninhabitable following damage
Changing keys and locks if a tenant doesn’t return the keys
Loss of rental income if your property is left inaccessible and unrentable for reasons beyond your control
Legal liability, like if a guest is injured on your property
Excess use of utilities, like if a guest leaves the shower running
Keep in mind that the coverage offered by landlord and short-term rental policies varies from insurer to insurer. When getting quotes, compare what each insurer and policy covers.
How popular short-term rental sites protect your home
Short-term rentals are incredibly popular, and sites that facilitate them usually offer some level of coverage for hosts. But you’ll still want to tell your home insurer before you rent out your vacation home to avoid coverage gaps.
Airbnb. As of January 2020, the Airbnb Host Guarantee offers up to $1 million in protection for homes rented through the site. But it won’t pay out for homes that are damaged by storms or acts of nature, and damage by any animals or pets isn’t covered — even if a guest brought them without your consent. You’ll also be covered for up to $1 million in liability through Airbnb’s Host Protection Insurance, though it excludes any damages or injuries that were intentional.
Vrbo. Vrbo offers up to $1 million in liability coverage for hosts, but as of June 2019, it doesn’t offer any protection against property damage. However, you can request a refundable deposit upon booking or suggest that your guests purchase Property Damage Protection, a short-term insurance policy, through the site. You can also request that guests sign a rental agreement before arriving.
Homestay. As of June 2019, Homestay doesn’t offer any sort of insurance or financial protection against liability or property damage.
How you insure your vacation home depends on how often you’re there and how you use it. To make sure you’re fully covered, be up front and honest with your insurer about how you use your home. And to get the best deal, compare home insurers to find a policy that fits your needs.
Common questions about vacation home insurance
Yes. While some policies will cover occasionally renting your home out, not all will. And if your home is damaged while it’s rented out and you didn’t tell your insurer, your claim can be denied.
No. Airbnb’s Host Guarantee only covers your home when it’s rented out and won’t cover certain major things, like storm damage. It’s intended to supplement a home insurance policy, not replace it.
No, you can have two separate insurance policies through two separate companies for your homes. But insuring both with the same company often makes things simpler.
Andrew Munro is the cryptocurrency editor at Finder. He was initially writing about insurance, when he accidentally fell in love with digital currency and distributed ledger technology (aka “the blockchain”). Andrew has a Bachelor of Arts from the University of New South Wales, and has written guides about everything from industrial pigments to cosmetic surgery.
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