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What Is Short-Term Rental Insurance?

Written by Jennifer Gorman
8 min. read
Reviewed by Cara Carlone
CPCU, API, AINS, property & casualty licensed agent

Renting out spare rooms and entire homes to short-term guests is an increasingly popular way to earn money. In October 2023, there were 1.64 million available short-term rental listings nationwide, up 17% from the year before.

Homeowners who rent their property on sites like Airbnb or VRBO may assume their existing homeowners insurance policy will cover claims related to guest incidents. However, standard home insurance policies do not cover short-term rentals. That’s where short-term rental insurance comes in.

What Is Short-Term Rental Insurance?

Short-term rental insurance is specialty coverage for property owners who rent out their primary home or vacation property on a short-term basis. That includes people who list their properties for nightly or weekly bookings on Airbnb, VRBO, and similar platforms. 

The purpose of short-term rental insurance is to help property owners protect their finances from the unexpected costs that come with hosting paying guests. For example, it can help pay for expenses like repairing property damage caused by guests or settling lawsuits with injured guests.

Short-term rental insurance is a type of landlord insurance, and like standard landlord insurance, it only covers the property owner. Renters and guests, on the other hand, need their own separate insurance to protect their personal belongings.

Short-Term Rental Insurance vs. Standard Landlord Insurance 

Both short-term rental insurance and standard landlord insurance are designed to protect people who rent out their properties. However, the length of your typical rental determines which type of policy you need.

Short-term rental insurance is tailored for temporary rentals. A temporary rental typically means a stay of less than 30 to 60 days, depending on the insurer. A standard landlord policy is for longer-term rentals. 

How Short-Term Renters Insurance Works

Short-term renters insurance is for people who rent their properties to short-term guests rather than long-term tenants. It’s important because standard homeowners insurance policies generally exclude coverage for short-term rentals. 

Typically, insurance companies offer short-term rental insurance as a policy rider. That means property owners have the option to add short-term rental coverage to their existing home insurance policy. However, there may be limitations, such as hosting paying guests for no more than a certain number of days per year.

Standalone short-term renters insurance policies are another option. These policies are separate and designed to address the unique risks of frequently renting out a space to short-term guests.

Coverages 

Short-term rental insurance policies vary from insurer to insurer, but some common components include:

  • Dwelling coverage helps cover the cost of repairing the structure of the rental home if guests cause damage.
  • Personal property coverage pays to repair or replace the items in your rental, such as furniture and appliances if they’re damaged or stolen by guests.
  • Liability coverage helps cover lawsuit costs for accidents that occur at the property, such as injuries to guests.
  • Loss of income coverage helps replace lost rental income when the property is uninhabitable due to a covered incident.
  • Excess use of utilities helps cover additional costs if a paying guest uses too much water or power. 

Exclusions From Coverage

Short-term rental insurance does not cover everything. Exclusions vary depending on the policy but often include:

  • Normal wear and tear: Minor damage that occurs from guests’ everyday use, such as scuffs on the floors or walls, is not covered.
  • Maintenance issues: Hosts are responsible for performing regular maintenance to avoid problems like mold growth and pest infestations.
  • Long-term rentals: Short-term rental insurance is only for temporary rentals. Properties that are rented out for stays longer than 30 to 60 days, depending on the insurer, are not covered.

AirCover and VRBO Insurance: Is It Enough?

Both Airbnb and VRBO offer some insurance protections for hosts, though neither plan is a substitute for personal short-term rental insurance coverage. Here’s a look at the coverage available to hosts through Airbnb and VRBO. 

Airbnb’s AirCover for Hosts 

AirCover for Hosts is a protection program for people who list their properties on Airbnb. It’s automatically included in each booking. The program includes $1 million in liability insurance and $3 million in damage protection for the host’s home and belongings. It also offers some other benefits, including guest identity verification and access to a 24/7 safety line.

Airbnb’s damage protection is designed to support hosts, but it is not an insurance policy. The company recommends that hosts purchase their own insurance to ensure adequate coverage.

What It Covers

Airbnb advertises several benefits that come with its AirCover for Hosts program, including protection for:

  • Property damage: Reimburses hosts if guests do not pay for the property damages they or their pets caused during the stay. 
  • Income loss: Covers lost booking income if hosts need to cancel confirmed bookings to repair damages.
  • Deep cleaning: Reimburses hosts for extra cleaning services needed to restore damage.
  • Host liability: Insurance that helps pay for bodily injury or property damage claims.

VRBO’s Liability Insurance for Hosts

Like Airbnb, VRBO offers some insurance protection for hosts. VRBO provides $1 million in liability coverage for each reservation that’s booked and paid for through its platform. It’s included automatically at no additional charge to hosts.

VRBO does not cover damage to the host’s property or loss of income when a property cannot be rented due to damage. Hosts are responsible for buying the necessary insurance coverage to protect their rental properties.

What It Covers

VRBO’s liability insurance is designed to protect hosts if someone else files a claim against them. It includes coverage for:

  • Traveler injury claims: Helps pay legal costs if a guest files a lawsuit after being accidentally injured while staying in the rental property.
  • Medical payments: Pays for minor medical bills when a guest is injured, up to a limit of $5,000.
  • Third-party property damage claims: Helps cover costs if someone else, such as a neighbor, sues a host for damages caused by a guest. 

Combining Short-Term Rental Insurance With Default Offerings 

Both Airbnb and VRBO recommend that hosts purchase their own insurance to cover incidents that happen during short-term stays. When a homeowner is covered by both a platform’s default insurance and their own private coverage, the policies work together to settle claims.

By combining both types of coverage, short-term rental hosts can protect their finances from a wider range of unexpected events. They can also access higher total coverage limits: If the coverage limits of the primary policy are reached due to a significant claim, the secondary policy helps cover the remaining costs.

See It In Action

Consider this scenario: A property owner lists their vacation home on VRBO. During a stay, a guest’s dog significantly damages the home’s furniture and flooring. The dog also attacks a next-door neighbor, who files a $1.5 million lawsuit due to their injuries.

The owner is automatically covered by VRBO’s $1 million liability insurance. They also have their own short-term rental insurance policy that covers property damage, loss of income, and $1 million in liability.

Together, the two policies offer enough coverage to settle with the injured neighbor. The VRBO policy does not cover the property damage or loss of income, but the short-term rental insurance policy does.

How Much Does Short-Term Rental Insurance Cost? 

The average cost of a short-term rental insurance policy ranges from around $1,000 to $3,000 a year. The range is so wide because insurers consider many factors when pricing policies, including:

  • Where the property is located: Some factors that determine the risk in a particular location are the area’s crime rate, typical climate, history of natural disasters, and proximity to fire stations. 
  • Amenities available to guests: Swimming pools, hot tubs, trampolines, gym equipment, and outdoor play equipment are attractive to guests, but they also create potential dangers that can impact insurance costs.
  • Extent of coverage: The types and amounts of coverage vary, and property owners can expect to pay higher prices if they select a higher level of coverage.
  • Hosting frequency: High guest turnover comes with risks, so property owners who rent their home frequently can expect higher premiums compared to people who host guests occasionally.

All in All 

Renting out space to short-term guests helps you put some extra cash in your pocket, but it’s important to have the right insurance in place to protect your finances. Short-term rental insurance is designed for people who host through sites like Airbnb and VRBO.

There are many options for short-term rental insurance, depending on your budget and coverage needs. Talk to a trusted agent for help finding the right policy for your rental.

Frequently Asked Questions

Do you need short-term renters insurance as a guest?

No, your existing renters insurance or homeowners insurance policy likely covers the stay. These policies include off-premises coverage, which means that belongings you take on vacation are also covered against events like theft.

However, guests may choose to purchase travel insurance for their stay. It covers certain unexpected costs of traveling, such as trip cancellation, trip delays, and lost luggage.

Does short-term renters insurance include coverage for natural disasters?

Short-term renters insurance is often available as an add-on to an existing homeowners insurance policy. Standard homeowners insurance policies offer coverage for damage caused by certain natural disasters, such as windstorms and wildfires, but generally do not cover flooding or earthquakes.

Standalone short-term renters insurance policies may offer additional coverage for natural disasters. For example, some insurers cover loss of income if a property cannot be rented due to a covered natural disaster.

How quickly can a short-term renters insurance policy be activated?

It varies from insurer to insurer. Some companies allow existing policyholders to add riders online, which helps make the process faster. Contact your insurer for details about processing times. The default coverage offered through Airbnb and VRBO is automatically applied with each booking, but other platforms may have different rules.

Can short-term renters insurance be purchased for international rentals?

Some insurance companies offer short-term rental insurance for international vacation rentals. Contact a trusted agent for help finding a policy for your out-of-country property. Airbnb and VRBO’s default insurance protections are also available internationally. However, the default coverages are not available in all countries. Contact Airbnb and VRBO to confirm the default coverage is available for your rental.

Are there any special considerations for shared accommodations?

Some property owners rent out individual beds in a hostel or individual rooms in a shared apartment. The criteria for short-term rental insurance vary from company to company, so it’s important to accurately describe the property and type of rental activity.

Some shared accommodations may require a commercial policy, such as hostel or bed and breakfast insurance. Work with a trusted agent to identify the right type of coverage for your property.