Does homeowners insurance cover short-term rentals?

Say you own a home in an area that's famous for seasonal festivities or is known as a year-round “destination location.” You may be considering renting out one of your rooms or your entire house through Airbnb, Vrbo or another short-term rental platform.

As more people work remotely, the short-term rental market has expanded like never before. The idea of earning extra money through passive income has turned many homeowners into peer-to-peer rental hostsOpens in a New Window.‍ ‍ ^{See note 1}

Whether you're interested in being a single-room host or an entire-house host, it's important to understand short-term rentals so you can properly protect your property with the right insurance coverage.

Are there financial risks with a short-term rental?

Short-term rentals can come in a variety of setups. Some homeowners rent out a room in their primary residence. Others may have a second property like a lake house, apartment in the city or cabin in the woods that they want to turn into a short-term moneymaker.

As with any investment, there will be financial risks. Not having the right short-term rental insurance policy, or enough overall coverage, can leave you exposed. This is especially true if you can't rent your damaged property because of pending repairs, or if a short-term renter is injured on the premises.

It's critical to discuss your short-term rental plans with your insurance provider to understand the potential risks and how to stay protected.

How do I insure my short-term rental?

The moment any area of your primary or secondary residence becomes a short-term rental “business,” you need an added level of protection to your homeowners policy. Call your USAA Insurance professional first to discuss coverage options such as rental property insurance (RPI).

Is RPI additional insurance for Airbnb, Vrbo and others?

When it comes to RPI, it doesn't matter which company you use to list and advertise your short-term rental property. RPI from USAA provides you with short-term rental insurance for Vrbo, Airbnb and others. It helps bridge the gap in certain areas that your homeowners policy may not cover.

• Home sharing coverage may help provide the protection you need as a short-term rental host, whether you rent out a room or an entire house.‍ ‍ ^{See note 2}
• Income replacement reimburses you for lost rental income if your short-term rental is being repaired following a claim.
• Personal liability coverage may help ensure legal fees and medical expenses get paid for a covered injury or loss for property damage on your short-term rental property.

In addition to getting rental property insurance, consider an umbrella policy. This can help protect you financially beyond the limits of your homeowners policy.

How much does this insurance cost?

The cost of coverage usually depends on how your short-term rental will be structured, if it's used as a business, and what type of policy your insurance company will allow.

Here are questions to consider when you make the call to your insurance professional:

• Are you planning to rent out a room in your primary home for occasional short weekend stays?
• Are you interested in renting to various guests on a more regular basis, as in a bed-and-breakfast scenario?
• Do you have a second home you want to turn into a full-time short-term rental property?

Your insurance professional can be a great source of information when determining which short-term rental scenario you want to pursue. You can:

• Align your goals with the RPI policy that best suits your needs.
• Review your personal situation and your goals for your property.
• Discuss your short and long-term vision so you can make the best decision.