Having a Homeowners insurance policy is crucial when you own a vacation rental home, but what if you don’t live in the home? Rental homes that are left vacant for 30-60 days or more may be considered “vacant” by the standards of your policy and may leave you with coverage gaps. Here are a few situations to consider for your vacation rental home’s insurance coverage.
UNOCCUPIED HOMES
Having a rental home that is completely unoccupied or rarely occupied can increase risks. Small problems that would normally be noticed by someone on the property (e.g. leaks, non-working devices, etc.) can go for days or weeks without attention. These can lead to big issues, and that is why a standard homeowners policy is unlikely to provide coverage.
In addition, you may have liability for accidents that occur on the unmonitored property. Moreover, standard perils like fire, wind, and hail may occur without immediate attention.
VACATION RENTALS
Properties being used as vacation rental homes are usually monitored more frequently than unoccupied homes. However, they still likely have periods of being unoccupied, and they also have larger liability risks from various guests using the property.
Regular homeowners policies generally exclude “business activities” like earning rental income. Do you have a homeowners policy with a “rental rider” or another similar endorsement? Make sure the policy covers you for the number of times you’ll be renting. More frequent rentals are often excluded by the language in these policy additions.
If you plan to lease your vacation rental home for longer periods at a time, you may need a landlord policy. Your insurance agent can advise you on the type of coverage that will provide the right protection for your rental property.
STEP ONE: DETERMINE OR ESTIMATE TOTAL USE
Try to determine or estimate the total use of your property for the year, whether it be unoccupied for a certain amount of time, rented for a certain amount of time, and/or owner-occupied for a certain amount of time.
This will give you the information to discuss with an insurance agent so that they can help you determine the coverages you will need to adequately protect your property. Otherwise, a claim scenario may leave you with an exclusion you weren’t aware you had.
STEP TWO: WORK WITH AN INDEPENDENT AGENT
The goal of your independent insurance agent is to provide your vacation rental property with sufficient protection while avoiding over-insuring to protect your financial interests.
Don’t let the wrong insurance leave you with a vacancy in your coverage. Contact us to discuss the right insurance coverage for your property.