Owning a vacation rental is an exciting investment, but it also comes with risks. Whether it’s a storm damaging the roof or a guest getting injured on your property, having the right insurance can save you from major headaches. We’ll dive into the costs and importance of vacation rental insurance and explain why it should be part of your investment strategy. Let’s make sure you’re covered so you can focus on growing your rental business! Have even more peace of mind with Cascadia Getaways managing your short term rental, helping you vet new short term rental investments and more.
What Is Vacation Rental Insurance?
Vacation rental insurance is a specialized insurance policy designed to protect vacation homes that are rented out to guests. This coverage is more robust than a typical homeowner’s policy, offering extra protection against the unique risks associated with renting out your property. It covers things like property damage, liability, and even the loss of income if something goes wrong with your rental.
When you rent out your vacation home regularly—whether through a platform like Airbnb or a property management service like Cascadia Getaways—traditional homeowners insurance may not cover everything. That’s where vacation rental insurance comes in, providing essential coverage for both the property and your guests.
Why Is Vacation Rental Insurance Important?
Protect Your Property
Owning a vacation rental can be a great source of income or offer a way to cover costs on your dream vacation home, but your property is exposed to a variety of risks. Storms, theft, fire, and vandalism are just a few things that could potentially damage your home. Vacation rental insurance ensures your property is protected from unexpected events, allowing you to repair or replace damaged parts without dipping into your savings.
Protect Your Guests
Your guests’ safety is a top priority, and vacation rental insurance helps ensure that they’re covered in case of an accident. If someone trips on the sidewalk or gets injured while using your amenities (like a hot tub or pool), liability insurance can help cover medical bills and legal costs. Without it, you could be responsible for significant expenses.
Avoid Legal Hassles
In addition to covering medical costs, vacation rental insurance helps protect you from legal actions. If a guest gets injured or something goes wrong on your property, the insurance can help cover the costs of defending yourself in court, giving you peace of mind.
The Cost of Vacation Rental Insurance
How Much Does Vacation Rental Insurance Cost?
On average, vacation rental insurance costs around 20% more than a standard homeowner’s policy. In 2022, the national average cost of homeowners insurance was $1,775 per year, which means vacation rental insurance typically costs around $2,130 per year. Of course, the exact cost can vary depending on several factors.
Factors That Affect Your Premium
Some key factors that insurers consider when determining your premium:
- Home’s Size: The larger the property, the higher the insurance cost.
- Home’s Age: Older homes may require more expensive repairs, and insurance companies account for this when setting your premium.
- Location: If your property is in a high-risk area (like a coastal region at risk of “the big one” or high fire risk areas), you’ll likely pay more for insurance.
- Rental Frequency: If you rent your property year-round, expect a higher premium. The more often your property is rented, the higher the risk. More rentals also help pay for insurance or upkeep.
- Amenities: Special features like pools, hot tubs, or docks can increase the risk of accidents, which can lead to higher premiums.
Why Is It Worth the Investment?
The price of vacation rental insurance is a small price to pay when you consider the potential costs of damages, liability, or legal fees that could arise without coverage. Protecting both your property and your guests can save you a lot of money in the long run.
Types of Vacation Rental Insurance Policies
Homeowner’s Policy
If you only rent your property occasionally, a homeowner’s insurance policy might be enough. However, you’ll need to check with your provider to ensure it covers short-term rentals. Some insurers offer endorsements or add-ons to standard homeowners policies that specifically cover short-term rentals. This is the easiest and cheapest option if it fits your needs.
Landlord Policy
If you rent your property more frequently, you may need a landlord policy. These policies offer more extensive coverage, including liability protection for guests. However, many landlord policies don’t include business interruption insurance, so you may want to explore other options if this is important to you.
Business Owner’s Policy (BOP)
For properties rented out year-round, a Business Owner’s Policy (BOP) is often the best choice. It combines several types of coverage, such as property insurance, general liability, and business interruption insurance. This type of policy is perfect for vacation rental owners who want maximum protection and higher liability limits.
Benefits of Vacation Rental Insurance for Investors
Peace of Mind
Accidents happen, and the best way to ensure peace of mind is by having proper insurance in place. With the right vacation rental insurance, you won’t have to worry about what could go wrong. Cascadia Getaways offers damage protection for every guest reservation helping to keep the small stuff off your insurance policy.
Easier Loan Approval
If you plan on taking out a loan for your vacation rental property, having insurance is often a requirement. Lenders typically want to see proof of insurance before approving a loan, as it guarantees that your property is protected.
Marketing Advantage
Vacation rental insurance can also give you a competitive edge when marketing your property. Many guests prefer to book with insured hosts because it assures them that they’re staying in a safe, well-maintained home. It’s also a requirement for platforms like VRBO and Airbnb, so make sure you have coverage before listing your property. Cascadia Getaways highlights accidental damage protection in guest marketing which offers guests more peace of mind knowing accidents happen and they are protected.
Tips for Choosing Vacation Rental Insurance
Know What’s Covered
Before purchasing a policy, make sure you fully understand what’s covered. Ask your insurer about any exclusions, especially for business use and vacant homes.
Liability Limits Matter
Liability coverage is one of the most important aspects of vacation rental insurance. A policy with higher liability limits (e.g., $1 million) offers better protection than one with lower limits (e.g., $300,000). It’s a small investment for significantly better coverage. We almost always recommend the higher policy based on marginal costs and returns provided.
Compare Quotes
Don’t settle for the first quote you receive. Take the time to compare policies from different insurers to ensure you’re getting the best coverage at the best price. It also makes sense to shop around from time to time.
FAQ About Vacation Rental Insurance in Oregon
Does Renters Insurance Cover Vacation Rentals in Oregon?
Typically, renters insurance does not cover vacation rentals. A specialized vacation rental insurance policy is needed to provide adequate coverage for both property damage and liability. Guests renting on platforms like Airbnb or Vrbo do not have renters insurance that will cover everything, they likely only have trip protection for cancellations.
Can I Rent Out My Property as a Vacation Rental in Oregon?
Yes, you can rent out your property as a vacation rental in Oregon, but make sure you’re following local regulations and zoning laws. Some areas may have specific rules for short-term rentals, including permits and tax requirements. Reach out to us and we can help you figure all the details out!
How Is Vacation Rental Insurance Different from Vacation Insurance in Oregon?
Vacation rental insurance covers the property owner’s interests, protecting the home and liability risks related to renting out the property. Vacation insurance, on the other hand, is designed for travelers, covering things like trip cancellations, lost luggage, or travel delays.
How Much Does Vacation Rental Insurance Cost in Oregon?
The cost of vacation rental insurance in Oregon depends on factors like property size, location, and rental frequency. On average, expect to pay around 20% more than a standard homeowner’s policy.
At Cascadia Getaways, we understand that vacation rental insurance is a crucial part of protecting your investment and ensuring peace of mind. Whether you’re just starting out or have an established rental property, we’re here to help you navigate the insurance process. Feel free to contact us for more information or to get started on your insurance journey!