Airbnb & Short Term Rental Property Insurance
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Property ownership is unique and having the freedom to rent how you want, when you want is important. We absolutely offer insurance options for short term rentals including Air B&B insurance, VRBO Insurance and more. Read below for a detailed overview
Owning a rental property can be lucrative but managing the risk of it can be stressful. The short term customers (less than 6 months) can provide you higher ROI, but are they providing more wear, tear and risk? This can really depend on many different factors like location, type of rental, duration of stay and many others. Let’s look at some facts about the insurance options in Ontario, Canada for Airbnb, VRBO and other short term rental plays.
- Homeowners insurance is set up and defined as single family occupancy and assumes the owners will reside there most often. The policy wording states that no more than 2 unrelated occupants live at the location unless disclosed. Additionally, rental of the property is not normally covered in any cases.
- Landlord Insurance/Rental Property Insurance is traditionally sold on the assumption that an annual lease is in place. Some carriers may say no less than 6 months as a strict guideline. The issue here is policy wording and language in your insurance contract negates short term rentals. Traditionally, landlords can and would buy option #2 and the insurance carrier would price the risk amongst the pool of annual renters. A rental property poses some additional risks like:
- Liability lawsuits: As you are the property owner and a tenant is occupying your space, if a lawsuit arises from damage or bodily injury at the location you can and will get named for someone else’s actions, not just your own.
- Vandalism: Say you have a tenant dispute and they vandalise the property or someone they know does so. Alternatively, a location is street facing and is spray painted, maliciously attacked or damaged by a third party. Review this coverage with a broker to look at options, we have some fun claims examples!
- Content Damage or appliance damage: You may not think you have much within the rental property other than the building investment itself. We know that even basic furnishings can add up in value. Appliances you own are also in need of coverage like fridges, stoves, dishwashers, laundry machines and more.
Water Damage Rant: Water claims are quickly and currently the #1 claim we are seeing in Ontario, Canada for property insurance. Let’s talk about a few key areas in detail.
- Sewer back-up or water damage: When you live in the property and have pride of ownership you are probably aware of the risk of putting clumps of food down the drain presents. Or, say treating the plumbing and pipes with the idea that you want long term health of the component s of the home. This may not be the case of a regular tenant, let alone someone there for just a night or two. Additionally, if a backup occurs there may be a delay to mitigate the initial damage while the tenant or short term renter decides what to do. Does your tenant know where the water shut-off is? Are they having a party and multiple people are distracted?
- Flood Insurance or Overland Water coverage: Flood risks and leak can present themselves from heavy rainfall, windows, leaking roofs and many other scenarios. It’s important to understand home policies have specific water exclusions around all types of water. You need to add overland water or flood coverage to get a suite of policy wording around these risks. Floods with a finished basement or hardwood floor can cause tens of thousands of dollars of damage. If a location is unoccupied between renters for even a day water can sit longer undetected causing mold and increased cost of remediation.
Over the years we talked with hundreds of landlords and short term rental owners. Sometimes, they are frustrated to find the existing insurance company won’t insure them anymore. Luckily we can easily help to provide options from a few different insurance carriers to compare. It’s important to keep in the mind that certain insurance companies design policies around homeowners only and your risk could have changed.
Also, our policies aren’t always more expensive, they are just suited for the risks and coverages you need. Even with high ROI properties at 80-85% occupancy there are days or hours of vacancy that can present risk. Having a plan around proper coverage should water, fire, wind, hail or other perils happen is part of a responsible plan for your investment. We understand the short term rental market and how it applies to insurance and we want to help guide you.
It’s best to book a time to chat today with James, who is an expert in the field. You can also submit some quick details below for a quote or idea of what data is required to provide detailed pricing.
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