Short-term rental insurance: how it works and which insurance companies offer it

Renting out your home or cottage can be a great source of income, but it does come with risks. We’ve all read the horror stories of the damage that short-term renters can do to a property. So how can you benefit from renting out your property and still protect your space? That’s where short-term rental insurance can be an option. 

What is short-term rental insurance?

Short-term rental or home-share insurance is insurance for landlords or homeowners who rent out their primary home or vacation property for a short period of time, usually up to six months. 

You might also see it offered as Airbnb insurance, but we’ll get to that later. 

Short-term rental insurance vs. homeowners insurance

If you are planning on renting out your primary home on a short-term basis, it’s a good idea to talk to your primary home insurance provider and see if your current policy covers you for short-term rentals. 

If you’re planning on renting out your property on a regular basis, your regular home insurance probably won’t cover any damage. That’s because most home insurance policies can be invalidated if homes are unoccupied for more than 30 to 90 days. In the eyes of the insurance provider, the longer you’re away from the property, the greater the risk of a peril happening and not being tended to.

Short-term rental insurance, however, can provide additional coverage. 

What does short-term rental insurance cover? 

Short-term rental insurance covers more than theft and damage. Most policies will also cover:

• Accidental and deliberate damage caused by guests or tenants
• Theft by guests and tenants
• Legal liability
• A loss of income in case guests damage the property and make it inhabitable
• The cost of utilities if guests get too enthusiastic about using water or hydro. 
• The cost of having to replace the keys and change the locks

Insurance offered by Airbnb and other rental companies

If you rent via Airbnb, there is the Host Guarantee, which offers up to $1 million USD in coverage in case of damage. You’re also covered for up to $1 million USD in liability with Airbnb's Host Protection Insurance. 

There are caveats to both, however. The Host Guarantee doesn’t cover damage caused by acts of nature or guests’ pets. And the liability coverage doesn’t cover intentional damage or injuries. 

Vrbo, another online vacation rental company, also offers liability coverage for hosts in case of accidents on the property, but it doesn’t offer any coverage or protection against property damage. Instead, you can ask for a refundable security deposit from your guests either at the time of the booking or when they arrive. Vrbo suggests that all fees including the security deposit be covered in a rental agreement. 

So, you will get some coverage via Airbnb and Vrbo but it may be a good idea to get short-term rental insurance to cover some of the holes left by these companies’ coverage. 

What does short-term rental insurance cost, and which insurance providers offer it?

Your premium for short-term rental insurance will depend on how much coverage you want, where your property is located, the items in the space and all the other things that are factored into a home insurance policy. Keep that in mind when you’re comparing costs.

Not all insurance companies offer short-term rental insurance. Some that do include: 

• Duuo
• Netsurance
• April
• Aviva
• Wawanesa
• BCAA
• Kase Insurance
• Aligned Insurance

Relying on somewhere like Airbnb or Vrbo’s coverage may not cover the damage that could happen to your home when renting it out, so consider getting short-term rental insurance. It can give you the security and control required in case something happens to your income property or your primary home.