Short-term rental insurance is a critical tool for protecting your investment and keeping it profitable in the competitive rental market.

Short-Term Rental Insurance: A Buyer’s Guide for Hosts

Short-term rental insurance safeguards hosts from guest-related damages and liabilities, filling gaps not covered by standard homeowner policies.

Coverage includes property damage, liability, and lost rental income, but excludes wear and tear and damage from intentional acts or certain natural disasters.

When selecting insurance, hosts should assess coverage limits, terms, provider reputation, and the claims process to ensure comprehensive protection.

Short-term rentals are reshaping real estate and the risks that property owners face. While rentals can be lucrative, they also come with liabilities: damage from a revolving door of guests, larger fixes from undiagnosed maintenance issues, and even potential guest injuries. For all these reasons and more, comprehensive short-term rental insurance is imperative. 

Robust insurance coverage is one of the best tools property owners have to navigate risks wisely. In some cases, it’s the only thing standing between you and a total loss on what seemed to be a lucrative investment. However, insurance is anything but straightforward. 

Read on to better understand the intricacies of short-term rental insurance and the best policies to help protect your assets. 

Use Smart Rates™ to optimize your pricing strategy.

Short-term rental insurance is specialized coverage designed to safeguard property owners against unique risks associated with renting their homes or spaces temporarily. Traditional homeowners insurance may not adequately address the distinct risks of short-term rentals, which is why many insurers have started to offer more targeted policies. 

Coverage under a short-term rental policy can encompass a range of potential issues, from property damage caused by guests to liability concerns arising from short-term occupancy. 

Why Do Property Owners Need Short-Term Rental Insurance?

Short-term rental insurance offers property owners robust protection against a spectrum of potential risks and liabilities unique to the transient nature of short-term rentals. Hosts with short-term rental policies can expect a greater level of: 

Comprehensive Risk Protection: Short-term rental insurance is a safety net for hosts should they encounter one of the many risks inherent in hosting guests. 

Financial Safeguard: For property owners, their real estate investment is a substantial financial asset. Short-term rental insurance mitigates potential losses and offers a protective buffer.

Resilience: Hosting guests introduces distinctive challenges, such as increased foot traffic, frequent turnover, and varied occupancy. Short-term rental insurance addresses these challenges specifically.

Protection Against Unforeseen Events: From accidental damages to unexpected events, short-term rental insurance provides an additional layer of protection.

Preserved Rental Income: Interruptions in rental income due to covered events can impact property owners significantly. Short-term rental insurance helps preserve income by covering losses during such disruptions.

Adaptability to Market Dynamics: The dynamic nature of the short-term rental market requires adaptive solutions, including the more flexible policies that some short-term rental insurers offer. 

What is Covered By Short-Term Rental Insurance?

Short-term rental insurance covers more than you might think. Policies typically include coverage for: 

Property Damage: Short-term rental insurance covers damages to the physical structure of the property caused by fire, vandalism, natural disasters, and more. This reduces the cost of repairs for property owners.  

Liability Coverage: Protection against liability is a key component. If a guest gets injured on the property or if their personal property is damaged, liability coverage steps in to cover legal expenses and potential settlements.

Personal Belongings: Some policies extend coverage to personal belongings within the rental unit. This may include furniture, appliances, and other items provided by the host. Coverage varies and hosts should be aware of the limits.

Loss of Rental Income: If your property becomes temporarily uninhabitable due to covered risks, short-term rental insurance can provide compensation for the lost rental income while the property is being restored

Additional Living Expenses: If a covered event forces guests to vacate the property temporarily, the insurance may cover their additional living expenses during the displacement (e.g. the cost of other accommodations). 

Medical Expenses: Liability coverage often includes coverage for guest medical expenses resulting from injuries sustained on the property. This can include emergency room visits, surgeries, and related medical costs.

Legal Costs: In situations where legal action is taken against the host, short-term rental insurance may cover legal defense costs, settlements, or judgments up to the policy limits.

Host Protection Insurance: Some platforms offer additional coverage like Airbnb's Host Protection Insurance, which provides primary liability coverage for up to $1 million per claim.

What Isn’t Covered by Short-Term Rental Insurance?

While vacation rental insurance provides crucial coverage, it's equally important for property owners to be aware of its limitations. Short-term rental insurance usually doesn’t cover: 

Wear and Tear: Insurance generally does not cover the natural wear and tear of the property or its contents. Regular maintenance and upkeep remain the responsibility of the property owner.

Intentional Damage: Deliberate damage caused by the property owner or guests is often excluded. Hosts should emphasize the importance of responsible guest behavior and following house rules.

Acts of War or Terrorism: Damage resulting from acts of war, terrorism, or other similar events may not be covered. Hosts operating in areas prone to geopolitical risks should explore additional insurance coverage.

Nuclear Accidents: Damage arising from nuclear accidents or related events is typically excluded. This is a specialized area of risk that requires separate consideration.

Certain Natural Disasters: While some natural disasters are covered, others may be excluded. Hosts in regions prone to specific natural disasters should carefully assess their policy's coverage in this regard. You may need to purchase a separate policy for wildfires or hurricanes, for example.

Business Activities: If the property is used for commercial purposes beyond short-term rentals, those activities might not be covered. Commercial insurance may be necessary.

Flood Damage: Flood damage is commonly excluded from standard policies. Hosts in flood-prone areas should explore separate flood insurance to make sure they get comprehensive protection. 

Pest or Rodent Damage: Damage caused by pests or rodents may not be covered. Proper property maintenance and pest control are essential for mitigating these risks.

Hosts must thoroughly review policy terms and conditions to understand these exclusions. Additionally, you may need to explore supplemental coverage or specialized policies to address specific risks related to your property and location.

Know exactly how much to charge based on your vacation rental pricing strategy.

Not all insurance policies are created equal. There’s nuance in every single one, down to what they’ll cover and the amount they’ll compensate you. Understanding your options is essential to choosing a policy that’ll work for you when you need it most. 

There are eight different types of insurance policies you should know: 

Homeowner’s Insurance: This is the standard insurance for residential properties. While home insurance provides coverage for personal belongings and liability, it may not offer adequate protection for short-term rental activities. You can also make changes to your existing homeowner’s insurance policy with a home-sharing insurance endorsement, but only if your Airbnb is your primary residence. 

Property Insurance: Specifically designed for rental properties, property insurance policies cover the structure itself against dangers  like fire, theft, or vandalism. It's fundamental coverage for short-term rental hosts.

Landlord Insurance: Hosts who rent out their own home may opt for landlord insurance which includes liability and property coverage. 

Vacation Rental Insurance: Tailored for the unique risks associated with short-term rentals, vacation rental insurance combines elements of homeowner's and property insurance. It provides coverage for property damage, liability, and loss of rental income.

Commercial Insurance: If the short-term rental property is primarily used for commercial purposes, such as hosting events or operating a business, commercial insurance is essential. It provides coverage for business-related liabilities.

Liability Insurance: Liability coverage protects hosts against legal expenses and damages if they are sued for injuries or property damage sustained by a guest during their stay.

Umbrella Insurance: Umbrella insurance offers additional liability coverage that goes beyond the limits of standard policies. It provides an extra layer of protection for hosts facing substantial claims.

Other Specialized Coverages: Depending on the specific risks associated with the property's location or unique features, hosts may explore additional coverages such as flood insurance, earthquake insurance, or bed-and-breakfast insurance.

Rental property owners should carefully assess their individual needs and property characteristics to determine which combination of coverages works best. Combining multiple policies may offer the most comprehensive protection against various risks.

Airbnb and Vrbo’s insurance programs can significantly impact the level of protection you have for your property. Let's explore the specifics:

Airbnb provides hosts with a valuable safety net through its Host Protection Insurance program. This serves as primary liability coverage, offering protection of up to $1 million. This coverage kicks in if a guest files a claim against the host for bodily injury or property damage during their stay.

Complementing the liability coverage, Airbnb's Host Guarantee focuses on safeguarding hosts against damages to their property caused by guests. With coverage extending up to $1 million, this protection is automatically provided to all hosts at no additional cost. Hosts should familiarize themselves with the terms and conditions to ensure comprehensive coverage.

Like Airbnb, Vrbo offers hosts liability insurance through its Liability Insurance Program. This $1 million primary liability coverage shields hosts from potential claims related to bodily injury or property damage. Hosts can either rely solely on Vrbo’s coverage for risks related to liability, or consider it as additional coverage to an external liability policy. 

Numerous short-term rental insurance companies have emerged to address the unique needs of property owners. While they may seem similar at face value, understanding the nuanced offerings of each is key to choosing an insurance policy that will protect your vacation rental business. Here are a few prominent players in the short-term rental insurance market and what you need to know about them: 

Proper Insurance: This insurer stands out for offering substantial coverage limits against property damage and liability. Hosts opting for Proper Insurance can benefit from a policy designed to meet the dynamic needs of the short-term rental market.

CBIZ: With a focus on tailored insurance solutions, CBIZ provides short-term rental property owners with coverage against property damage and liability incidents. CBIZ's offerings are known for their flexibility, accommodating various property types and risk scenarios.

Thimble: Positioned as a provider with a commitment to simplicity, Thimble offers short-term rental insurance that caters to the evolving needs of hosts. Thimble's policies come with user-friendly terms and conditions, making it a suitable choice for hosts seeking straightforward coverage.

Factors to Consider Before Choosing an Insurance Provider

Coverage Limits: Evaluate the maximum coverage amounts offered for property damage, liability, and other incidents.

Policy Terms: Understand the terms and conditions of the insurance policy, including any exclusions or limitations.

Reputation: Research the provider's reputation within the insurance industry, considering customer reviews and testimonials.

Claims Process: Familiarize yourself with the claims process, including how to file a claim and the provider's track record in settling claims promptly.


Short-term rental insurance is one thing hosts can’t afford to get wrong. As many details as there are to understand—coverage intricacies and provider options among them—the work is well worth it. Having a comprehensive insurance policy that protects your business is the shield you need to confidently welcome guests into your rental.

As crucial as short-term rental insurance is, though, protecting your business doesn’t end there. Push your proactivity even further by developing a personalized pricing strategy to attract more guests. Dynamic pricing tools automatically optimize your pricing based on real-time insights into short-term rental market dynamics, competition, and many other variables. With both robust insurance coverage and a dynamic pricing strategy, you’re playing both defense and offense—a key to success in the competitive short-term rental landscape. 

AirDNA’s vacation rental pricing tool uses data-driven recommendations to propose the best daily rates.

What does short-term rental insurance typically cover?

Short-term rental insurance generally covers property damage, liability arising from guest injuries, theft, vandalism, and loss of rental income due to covered perils.

Is short-term rental insurance mandatory for hosts?

While not mandatory, having short-term rental insurance is strongly recommended. It safeguards hosts from financial losses resulting from unforeseen events.

How does short-term rental insurance differ from regular homeowners insurance?

Short-term rental insurance is specifically tailored to the unique risks associated with renting out a property for short durations. It often provides coverage for incidents related to guest stays, which may not be included in standard homeowners insurance.

What factors should hosts consider when determining coverage limits?

Hosts should consider the property's value, potential liability risks, and the cost of rebuilding or repairing the property when determining coverage limits.

Can short-term rental insurance cover property damage caused by guests?

Yes, short-term rental insurance typically covers property damage caused by guests, offering protection against accidental damages.

Are there specific insurance options for Airbnb and Vrbo hosts?

Yes, both Airbnb and Vrbo offer insurance programs designed to address the unique needs of their hosts. Airbnb provides host liability insurance and host damage protection, while Vrbo 

What should hosts do in the event of a claim?

In the event of a claim, hosts should promptly contact their insurance provider, provide necessary documentation, and follow the prescribed claims process to get it resolved.

Can short-term rental insurance cover personal belongings left on the property?

Short-term rental insurance may cover personal belongings left on the property, but hosts should review their policy terms to confirm this coverage.

Short-term rental insurance is one thing hosts can’t afford to get wrong. Explore our comprehensive guide and find the right fit for your property.

Short-Term Rental Insurance: A Buyer’s Guide for Hosts

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