If you’ve been insuring your vacation rental with a standard homeowner’s policy, it likely won’t be enough to cover the various types of damage that are inherent when renting out property, like a guest accidentally breaking that $3,000 65-inch flat screen while playing catch in the living room.

And it also won’t cover any injuries that your guests sustain on your property, or lost income should it be rendered un-rentable for a period.

The answer is vacation rental property insurance, which you can think of like a homeowner’s policy with some added protection for contents and liability.

Even if you have a solid contract that requires guests to pay for damage to your rental and require a deposit, if someone doesn’t have the money to pay for damage, you can try to sue but collection will be a long way off.

In other words, if you don’t have vacation rental insurance, you’re on the hook.

What you need to know

A standard homeowner’s insurance policy will not provide coverage for business activities. Also, policy language will vary from insurance company to insurance company and from state to state. So, it’s wise to give us a call about your options.

Usually, there are two alternatives:

• If the property is used mostly for short-term rentals of less than 30 days, then you may be able to purchase a special endorsement for your homeowner’s policy from your insurer.
• If you’re renting on a more frequent basis, you may need to purchase a separate business insurance policy for short-term vacation rentals.

The three main areas you’ll want to insure are:

• Liability – The biggest liability you’ll face with a vacation rental is injury to your guests or damage to their property due to your alleged “negligence.” Insurance would provide coverage for any injuries sustained by guests on your property that they blame you for, and for costs if they file suit against you.

• Building and contents – If one of your guests starts a kitchen fire that burns half the property down, this part of a policy will cover rebuilding of the structure and replacement and installation costs of contents damaged or destroyed.

• Rental income – If your property is damaged and rendered un-rentable for a period, a proper policy can also reimburse you for lost income during that time.

Before securing a policy

Before you decide on a policy, you should take stock of your rental:

• Do you provide recreational items like bikes, a swimming pool or row boat? This increases your chances of a liability claim.
• What are the conditions around the property? Is the area prone to wildfires or other natural disasters?
• Hire an inspector to check the condition of piping and wiring to bird-dog any signs of wear that could lead to a leak or fire.

If you also stay in your rental

If you insure your short-term rental as a business, you can also stay there since there are no standard occupancy restrictions on a business policy. This means the property is insured while you, your friends or family, and of course paying guests stay there.

If the short-term rental is also your primary residence, you can still purchase a vacation rental policy. In that case, the policy simply adds $1,000,000 in personal liability and $50,000 in loss of use to relocate in the event the property is being rebuilt. This is very important if you don’t carry a homeowner’s policy elsewhere.