How Much Vacation Rental Insurance Do You Need?

By April Klazema
Published: 09/01/15 Topics: Insurance, Lodging Management, Vacation Rentals Comments: 0

When you are looking to buy vacation rental insurance coverage for the first time, you will likely have a laundry list of different questions that you want answered. Specifically, how much vacation rental insurance coverage do you need, how much can you expect to pay to insure a home that you are renting out to vacationers, and how will the cost of the policy compare to what you are currently paying to insure your own personal home?

To get answers to these questions, we reached out to Eric Kossian, the Agency Principal at InsurePro (www.insurepro.info). Based in Washington and serving the entire state, InsurePro is a respected and reputable insurance agency, and Eric is a longtime industry expert with extensive knowledge in all kinds of insurance coverage—including vacation rental insurance.

In regards to how much vacation rental insurance cover homeowners should get, Eric emphasized the importance of commercial general liability coverage. He noted that buyers should look for policies that include $1 million in liability per occurrence and $2 million aggregate per year (in case there is more than one liability claim in the space of a calendar year).

"When dealing with renters who don't know you, you are more likely to be sued, as [the renters] view you—the property owner—as a business," Eric said, explaining why liability coverage is the crux of most vacation rental property insurance policies.

In addition to $2 million aggregate liability coverage, Eric also noted a number of other "must-haves" for vacation rental insurance policies, including income coverage (also known as "loss of rents"), replacement cost valuation for the building, replacement cost valuation for the contents of the building, and enhancement coverage (in the case of theft or damage to the property caused by a guest). The coverage amounts for the replacement cost valuations for your vacation rental property "should match fairly closely" to an existing homeowners policy, according to Kossian.

As for the cost of a vacation rental insurance policy versus, Eric did caution that insuring a rental property can end up being substantially more expensive than insuring a secondary home whose function is personal use only.

"For the same location, compared to insuring the home as a secondary residence used just personally, a Vacation Income Property policy will be 25 to 100% more in premium, depending on amount of lost income coverage needed and liability needed," Kossian explained.

Do you have any addition questions about how much vacation rental insurance coverage you might need for your property, or how much you should plan to spend on a vacation rental policy? Reach out to us today!

Author: April Klazema – Reporter, Vacation Rental Association
Blog #: 0414 – 09/01/15