Investing in vacation rental damage insurance is always worthwhile for property managers. No matter what preventative measures you put in place, damages can and do happen.
And where a standard homeowners insurance fails, a specialised policy for short-term rentals can be the difference between a catastrophic loss and an unfortunate but salvageable situation.
In this article, we’ll take you through everything you need to know about damage insurance for vacation rentals, including the top 10 insurance providers to consider.
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Why vacation rental damage insurance is a good investment for property managers
When a homeowner decides to rent out their property on a short-term basis, one of their biggest worries is whether guests will treat their home with as much care and respect as they do. As a property manager, it’s your job to ensure that your homeowner’s property—which is likely their biggest asset—is protected.
While there are effective ways to prevent damages from occurring in the first place (such as vacation rental guest screening), things can slip through the cracks and accidents can happen. That’s why it’s crucial to have a specialised vacation rental damage insurance policy that allows you to mitigate the loss and fix issues as quickly as possible.
“Not only can property damage lead to direct costs and lost revenue for the business, but the operational and reputational impacts of these instances should not be underestimated,” said Andrew Boldt, COO at SUPERHOG.
What types of insurance do vacation rentals need?
When they start working with you, homeowners will likely already have a standard homeowners or landlords insurance policy.
These will include:
- Buildings insurance (including liability).
- Contents insurance (to cover risks when the property is unoccupied or occupied by the homeowners or the homeowner’s family).
However, the standard homeowners insurance policy does not cover damages caused by short-term rental guests or your liability as a property management business. As a result, you should always have the following programmes in place:
Guest screening and security deposits
The best way to protect your homeowners’ properties and your reputation is to be proactive about preventing damages. There are two major ways to do this: by implementing a guest screening process and a damage deposit solution.
Firstly, guest screening allows you to be selective about guests and bookings, accepting those you can trust and weeding out those who are more likely to cause damages. Vetting your guests doesn’t have to be a time-consuming, manual process. For example, SUPERHOG’s advanced guest screening technology allows you to automatically verify all your guests and validate each booking.
Secondly, asking for a security deposit gives your homeowners peace of mind, helps to ensure that guests understand their potential liability for damages, and allows you to fix damage issues as quickly as possible. Alternatively, you can also choose to collect a damage waiver, which is a great way to settle damage issues promptly (especially in low-ñevel damage incidents).
“The SUPERHOG damage waiver option can facilitate taking a non-refundable fee from the guest in exchange of a $500 damage waiver,” Andrew said. “This enables you to build a fund to settle smaller damages and if well managed, generate a steady income stream.”
Vacation rental damage insurance
Vacation rental damage insurance allows you to mitigate damages to your homeowner’s property or their belongings caused by guests should they fail to meet their liability.
SUPERHOG offers comprehensive protection of up to $5,000,000 in case of damages caused during a validated guest’s stay.
Together with guest screening and security deposits or damage waivers, vacation rental damage insurance allows you to maintain good relationships with your homeowners and even attract new clients, growing your portfolio and boosting your revenue.
Liability insurance
Property managers should also take into account their potential liability as a business in relation to the services that they provide, which is not covered in the standard landlords or homeowners policy.
Liability insurance covers the penalties and legal fees that your business may face in case a guest sustains an injury during their stay at your property and decides to take legal action.
“Public liability and professional indemnity insurance should then be considered by the PM as a minimum cover on top,” Andrews said. “It is always worth seeking professional advice to ensure an appropriate programme of insurance is in place,” he added.
Risk management
Last but not least, while insurance programmes are crucial, risk management strategies are just as important.
“The key to this is to ensure PMs are only working with ‘bona fide’ professional service providers who are also insured, such as maintenance teams and contractors,” Andrew said.
Understand regs like New York Crackdown.
“You don’t want their problems to become your problems,” he added.
What about the host protection policies provided by OTAs?
You may be wondering why you need extra protection on top of the policies offered by OTAs like Airbnb and Vrbo.
While these channels do offer some degree of protections—like Vrbo’s Accidental Damage Protection policy and Airbnb’s AirCover—these may not cover everything you need them to cover. For example, AirCover doesn’t cover damages caused by extreme weather conditions like earthquakes and hurricanes.
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Andrew reminded us that while most OTAs focus on trust and safety, they are first and foremost travel businesses that “work on behalf of their guests and want them to return and continue to book with them time and time again.” As a result, the approach towards host protection and the way payouts are issued varies by OTA.
“At SUPERHOG, our entire mission is focused on making short-term rentals safe and attractive to both hosts and guests across the globe; ensuring that every booking ends well, no matter what platform is used. SUPERHOG is independent and proven to reduce incidents of guest damage and chargebacks, ultimately helping increase the profitability of our property management partners,” Andrew said.
Top 10 vacation rental damage insurance providers
1. SUPERHOG
SUPERHOG combines guest screening and damage protection for fast-scaling property management companies. Their advanced guest verification system uses AI and Machine Learning to review and verify your guests.
At the same time, SUPERHOG makes protecting your homeowners’ properties hassle-free with traditional damage deposits and damage waivers.
In addition, SUPERHOG guarantees that guests meet their liability for any damages caused and reimburses Hosts through an insurance-backed Host Guarantee up to $5,000,000.
2. Proper Insurance
Proper Insurance offers a custom-penned vacation rental insurance policy. It entirely replaces your homeowner’s policy providing the appropriate coverage for a vacation rental property.
The policy also offers comprehensive coverage for vacation rental owners’ building(s), contents, commercial business liability and business income. It provides a safety net and peace of mind, especially for properties that are located in areas that depend almost entirely on one season’s income.
Furthermore, Proper provides owners with the coverage and flexibility needed to adjust and accept short-term, mid-term, or long-term bookings.
3. InsuraGuest
InsuraGuest helps vacation rental managers and owners in the short-term travel industry ensure a standard of protection for guests and, in turn, their properties.
The InsuraGuest software platform was designed to “fill the gap” where other conventional travel insurance policies may fail to cover, such as incidents of damage or injuries that aren’t regarded as someone’s fault.
Their policies include accidental in-room damage, theft of personal property, accidental medical expense, accidental death and dismemberment for each of the facility’s guests, governed by their single software system.
4. Red Sky Travel Insurance
Red Sky Travel Insurance is an experienced vacation rental travel insurance company located in America. They provide coverage exclusively to the vacation rental industry in coastal, lake, ski and mountain destinations, working closely with vacation rental management companies.
Red Sky’s ownership and management team have been in the vacation rental industry for decades, so they know from experience the challenges property managers face, and offer their expertise to help meet the needs of both the guest and the business goals of vacation rental managers through their comprehensive travel insurance products.
5. Proctea
Proctea is a vacation rentals insurance provider located in Spain. They offer multi-risk insurance covering everything from fires to third-party claims. Their vacation rental insurance is tailored to each owner and their needs. It is far more flexible than you average home insurance.
Since vacation rentals in Spain have significantly proliferated, owners/property managers must understand how to protect their properties, especially when Civil Liability insurance only takes care of what may happen to guests and not what happens to your home. Proctea helps to avoid those surprises.
6. intasure
intasure is a vacation rental insurance specialist. They provide insurance for properties across the world and have lots of experience in dealing with multiple countries’ insurance requirements.
intasure realises that vacation rentals come in all shapes and sizes and that there is not a one-size-fits-all policy. They have a team of experts who can help you create the perfect insurance for your vacation rental properties.
7. Travel Guard
Travel Guard is a worldwide leader in travel insurance and global assistance, working with an array of property management companies across the vacation rental industry. They provide numerous assistance services and coverage options that can be customised to your needs.
Travel Guard understands that as a property manager, you want to provide for your guests with a sleek vacation. Still, common travel problems such as delays, trip cancellation are all too familiar. They pride themselves on their ability to remain agile and quickly respond to vacation rental managers’ changing needs, no matter the property size or area of specialisation.
8. VRMA Member insurance
This policy is exclusively for VRMA members and offers a plan specifically tailored to their needs. If anyone knows about vacation rentals, it’s the VRMA. They understand that the requirements of this industry are unique and therefore, can offer the type of insurance that vacation rental owners are looking for.
9. CBIZ
CBIZ is a highly valued insurance provider that covers both owners AND property managers. This partnership with property managers offers a complete package to vacation rental owners. The property manager’s commission income and the owner’s income are insured. In addition, this policy can entirely replace your current homeowner’s insurance.
10. Safely
Safely offers the full package. In addition to homeowners insurance for rental periods, Safely also offers a guest screening service specifically designed to improve modern property management.
They have a database of over 1 million vacation nights with reviews and information on potential guests and hosts. If that wasn’t enough to offer, Safely also provides a payment protection service that holds payment until after the stay, to ensure that the host and guest are satisfied.
Editor’s note: This post was originally published in December 2015 and has been updated for accuracy, depth and comprehensiveness.
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