Short term vacation rentals are on the rise and for many homeowners looking to rent their property they assume their current homeowners insurance policy will cover them in the event of a claim. What they don’t understand is that by renting their home it’s considered a business activity which is an exclusion and grounds for the insurance company to deny these claims.
When it comes to insuring a vacation rental the owners are faced with a daunting task of trying to find an affordable solution without sacrificing coverage. Insurance carriers such as State Farm, Allstate, American Family, Farmers, and many others don’t have a product to accommodate this growing need so homeowners are left to scour the internet for options. This is where it gets a bit tricky, there’s a handful of brokerage markets that offer coverage however they have a lot of sub-limits and very confusing contracts. I first encountered this dilemma last year with a client who has a property in Flagstaff. My first thought was to contact our several of our Excess & Surplus brokerage markets to see what options are available and to get a quote. Once I started receiving quotes back I really spent some time reading the coverage forms and realized the policies were not what I was comfortable proposing to my client. After a bit more research I found a company which blew the door wide open on coverage, in fact they even extend business income coverage for the Property Management in the event of a covered loss, they extend the additional insured to the Property Management, and to top it off they’re extremely competitive on price.
I’ll wrap this up with one piece of advice, really take the time to review the coverage forms used and verify if the carrier has a vacancy clause and/or length of rental requirements. If you find yourself confused or not sure what your reading (some of these contracts can get pretty wordy) please give us a call and we would be happy to speak with you.