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Dave Berliner
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March 15, 2017
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Protecting Your Vacation Rental Property

Have you ever considered renting your home, apartment or secondary property for some extra income? Homeowners around the globe are using online outlets such as Airbnb, VRBO and HomeAway to rent out their properties for daily, weekly and monthly fees. These companies cater to owners who may be away for extended periods of time or those who would like to cash in on major events coming to their cities when hotels are at full capacity and visitors are seeking alternative lodging options. For people with desirable ZIP codes, this can become a nice revenue stream. However, before handing your keys over to a third party proprietor, there are several important issues to consider to help ensure that you and your property are protected.

vacation rental

Get Covered
The very first item on your to-do list should be to consult your agent and / or insurance carrier to find out if your current policies (homeowners or renters) provide adequate coverage for rental activity. It’s possible that if your carrier has no knowledge of your intention to provide a vacation rental property, your claim could be denied. This could be somewhat dependent upon the length of the rental, which is another reason to contact your insurance professional. Your carrier might require a copy of a rental agreement, so it’s best to have that in place from the start. The rental agreement should clearly outline the terms of the vacation rental property, as well as any stipulations during the period of occupancy for your guests.

If you are renting your space without the assistance of a company in the vacation rental marketplace, it may also be wise to hire a property manager. This is particularly important if you’ll be away for an extended period of time because a property manager can check in on your home and attend to any issues that might arise in your absence. Of course, requiring a security deposit or refundable damage deposit is smart business and could supplement payment for any damage caused by renters that may not be covered by your homeowners policy.

Although extensive property damage to rental properties is fairly rare, most of the aforementioned booking companies offer some degree of insurance protection that can be included in the rental contracts. For example, HomeAway’s property damage protection plan can be included to provide up to $5,000 in coverage for accidental damage to the vacation rental. In this instance, there is no deductible and the coverage provides a limit which shields the homeowner from accidental damage to items such as broken lamps and windows, damaged doors, walls and furniture, stained bedding, towels and linens, and lost or stolen keys (including rekeying costs). Although the coverage limit is relatively small, this option still provides property owners with protection against minor damage to the home and its contents without having to file a claim under their own insurance policies.

Protect Your Property
Once you’ve received the green light from your carrier, the next order of business is protecting your valuable articles . While it might be frustrating to discover a broken piece of furniture, it would be quite a different story if any of your valuables went missing at the hands of a renter. Items of significant value should be placed in an off-site lockbox or storage facility, or at the very least be locked in a safe, vault or other undisclosed area. It is important to know that your coverage may be compromised if valuables or various pieces of personal property are left out in the open. As an added benefit, many carriers offer a credit toward annual premiums if valuables are stored off-site or in a locked safe, so you can potentially save money while protecting your belongings. 

In addition to securing valuable items, you may also want to notify your neighbors of your intention to rent out your property. Not only can neighbors serve as an extra set of eyes on your property while you are away, but they also won’t be alarmed if they happen to see unfamiliar faces treating your home as their own. Furthermore, it might be a good idea to take photos and / or video of the interior and exterior of your home, as this footage could come in handy in the event of a loss.

Property for Profit
Vacation rentals have become big business within the last 10 years. With millions of listings in the marketplace, there are many alternatives to the traditional hotel, condo or resort lodging that can provide convenient revenue streams for property owners. However, it is important to be aware of the liabilities associated with opening your home for rent and to take the necessary precautions to protect your property and your valuables. Be sure to discuss your rental intentions with your insurance broker and / or carrier so you have a better understanding of how your policy may or may not respond in the event of a claim. Your number one priority is, and always should be, protecting yourself.

This article originally appeared in the 2016 | ISSUE THREE of the SilverLink magazine under the title “Welcome (To My) Home Protecting Your Vacation Rental Property.” To receive a complimentary subscription to the SilverLink magazine, sign up here.

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